Prepare adjusting entry to recordfair value, and indicate statementpresentation.E16.11 (LO 3), AP Financial Statement Writing At December 31, 2022, available-for-sale debtsecurities for Storrer, Inc. are as follows. The securities are considered to be a long-term investment.Fair Value$16,00014,00021,000$51,000SecurityABсCost$17,50012,50023,000$53,000Instructionsa. Prepare the adjusting entry at December 31, 2022, to report the securities at fair value.b. Show the statement presentation at December 31, 2022, after adjustment to fair value.c. E. Kretsinger, a member of the board of directors, does not understand the reporting of the unreal-ized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes thatit serves.

Adjusting entries ensures that the financial statements of a business (such as the income statement…

Answered: Security A B C Cost $17,500 12,500…

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Security A B C Cost $17,500 12,500 23,000 $53,000 Fair Value $16,000 14,000 21,000 $51,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Prepare adjusting entry to record
fair value, and indicate statement
presentation.
E16.11 (LO 3), AP Financial Statement Writing At December 31, 2022, available-for-sale debt
securities for Storrer, Inc. are as follows. The securities are considered to be a long-term investment.
Fair Value
$16,000
14,000
21,000
$51,000
Security
A
B
с
Cost
$17,500
12,500
23,000
$53,000
Instructions
a. Prepare the adjusting entry at December 31, 2022, to report the securities at fair value.
b. Show the statement presentation at December 31, 2022, after adjustment to fair value.
c. E. Kretsinger, a member of the board of directors, does not understand the reporting of the unreal-
ized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes that
it serves.

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