Merrill Lynch, the investment banking company, often has extra cash to invest Suppose Merrill Lynch buys 1,000 shares of Microsoft Corporation stock at $55 per share Assume Merrill Lynch expects to hold the Microsoft stock for 1 month and then sell it The purchase occurs on December 15, 20X4 At Dec...

1 Merrill Lynch investment is Marketable debt security because t ...

Merrill Lynch, the investment banking company, often has extra cash to invest. Suppose Merrill Lynch buys 1,000

Question:

Merrill Lynch, the investment banking company, often has extra cash to invest. Suppose Merrill Lynch buys 1,000 shares of Microsoft stock at $55 per share. Assume Merrill Lynch expects to hold the Microsoft stock for 1 month and then sell it. The purchase occurs on December 15, 20X4. At December 31, the market price of a share of Microsoft stock is $63 per share.
Required
1. What type of investment is this to Merrill Lynch? Give the reason for your answer.
2. Record Merrill Lynch's purchase of the Microsoft stock on December 15 and the adjustment to market value on December 31.
3. Show how Merrill Lynch would report this investment on its at December 31 and any gain or loss on its income statement for the year ended December 31, 20X4.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...