During 2012, Spelling Inc. purchased the following trading securities: Security .................................................. Cost ............... Fair Value, Dec. 31,

Question:

During 2012, Spelling Inc. purchased the following trading securities:
Security .................................................. Cost ............... Fair Value, Dec. 31, 2012
Bizarre Corp. common ................................. $31,000 ................... $ 33,000
8% U.S. Treasury notes ................................... 16,000 ....................... 9,000
PhalCo bonds ............................................. 22,000 ........................ 25,000
At the beginning of 2012, Spelling had a zero balance in Market Adjustment-Trading Securities.
1. What entry would be made at year-end, assuming the preceding values?
2. What entry would be made during 2013, assuming one-half of the Bizarre Corp. is sold for $17,000?
3. Give the entry that would be made at the end of 2013, assuming the following situations:
(a) The fair value of remaining securities is $50,000.
(b) The fair value of remaining securities is $52,500.
(c) The fair value of remaining securities is $56,000.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...