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Security Cost Fair Value Unrealized Gain (Loss) $15,000 14,000 ($2,500) 1,500 A $17,500 12,500 B 23,000 $53,000 25,500 2,500 Total $54,500 1,500 Previous fair value adjustment balance-Dr. 400 Fair value adjustment-Dr. $1,100

Security Cost Fair Value Unrealized Gain (Loss) $15,000 14,000 ($2,500) 1,500 A $17,500 12,500 B 23,000 $53,000 25,500 2,500 Total $54,500 1,500 Previous fair value adjustment balance-Dr. 400 Fair value adjustment-Dr. $1,100

FINANCIAL ACCOUNTING
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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(Available-for-Sale Debt Securities Entries and Financial Statement Presentation) At December 31, 2017, the available-for-sale debt portfolio for Steffi Graf, Inc. is as follows.

Check below image for portfolio:

On January 20, 2018, Steffi Graf, Inc. sold security A for $15,100. The sale proceeds are net of brokerage fees.
Instructions
(a) Prepare the adjusting entry at December 31, 2017, to report the portfolio at fair value.
(b) Show the balance sheet presentation of the investment-related accounts at December 31, 2017. (Ignore notes presentation.)
(c) Prepare the journal entry for the 2018 sale of security A.

Security Cost Fair Value Unrealized Gain (Loss) $15,000 14,000 ($2,500) 1,500 A $17,500 12,500 B 23,000 $53,000 25,500 2,500 Total $54,500 1,500 Previous fair value adjustment balance-Dr. 400 Fair value adjustment-Dr. $1,100
Transcribed Image Text:Security Cost Fair Value Unrealized Gain (Loss) $15,000 14,000 ($2,500) 1,500 A $17,500 12,500 B 23,000 $53,000 25,500 2,500 Total $54,500 1,500 Previous fair value adjustment balance-Dr. 400 Fair value adjustment-Dr. $1,100
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