Reconstructing transactions involving short-term securities available for sale. The financial statements of Zeff Corporation reveal the following information with respect to Securities Available for Sale:

During Year 2, Zeff Corporation sold securities for \(\$ 14,000\) that had a book value at the time of sale of \(\$ 13,000\).
Set up T-accounts for each of the three accounts above and enter the balances on December 31, Year 1 and Year 2, before making the closing entries for Year 2. Enter in the T-accounts the entries that Zeff Corporation made during Year 2 for the following:

a. Sale of marketable securities

b. Revaluation of marketable securities to market value on December 31, Year 2.

c. Purchase of marketable securities during Year 2.

Transcribed Image Text:

December 31 Year 1 Year 2 Balance Sheet Marketable Securities at Market Value.... $187,000 $195,000 Net Unrealized Holding Gain on Securities Available for Sale 12,000 10,000 Income Statement Year 2 Realized Gain on Sale of Securities Available for Sale $4,000