Brooks Co. purchases various investments in trading securities at a cost of $66,000 on December 27, 2008.

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Brooks Co. purchases various investments in trading securities at a cost of $66,000 on December 27, 2008. (This is its first and only purchase of such securities.) At December 31, 2008, these securities had a market value of $72,000.

1 Prepare the December 31, 2008, year-end adjusting entry for the trading securities’ portfolio.

2 Explain how each account in the entry of part 1 is reported in financial statements.

3 Prepare the January 3, 2009, entry when Brooks sells a portion of its trading securities (that had originally cost $33,000) for $35,000.

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Financial Accounting Information For Decisions

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Authors: John J. Wild

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Brooks Co. purchases various investments in trading securities at a cost of $66,000 on December 27, 2008.

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Financial Accounting Information For Decisions

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