Chapter C, Problem 11QS

To determine

Long Term Investment:

Long term investment is the investment for long period generally for more than one year. The long term investment helps in the purchase of fixed assets, expansion, or for growth of the company. It shows under assets head of the balance sheet.

Equity Security:

It is the investment in the stock of another company. Sometime the company may invest in the common stock of another company and earn the huge return from that. Equity security involves high risk as the return is received after all the dues of the company.

Journal Entry:

Journal is the primary record of the business transaction in chronological (date wise) order. Journal Entry contains two effects one is debit and other is credit, under double entry book keeping system.

Adjusting Entries:

Adjusting entries are made at the end of the year to adjust the financial position of the enterprise according to accrual basis of accounting.

To prepare: Journal entries to record the transactions.

1.