Trading Securities Tolland Financial began operations in 2018 and invests in securities classified as trading securities. During 2018, it entered into the following trading security transactions:


Purchased 10,000 common shares of DTR at \(\$ 50\) per share Purchased 44,000 common shares of MJO at \(\$ 22\) per share At December 31, 2018, DTR's common shares were trading at \(\$ 62\) per share and MJO's common shares were trading at \(\$ 21\) per share.

\section*{Required:}

1. Prepare the necessary adjusting entry to value the trading securities at fair market value.

2. CONCEPTUAL CONNECTION What is the statement of earnings effect of this adjusting entry?

\section*{Exercise