At the beginning of 2019, Able Company had the following portfolio of investments in trading securities (all of which were acquired at par value):

During 2019, the following transactions occurred:
May 3 Purchased C debt securities at their par value for $50,000.
July 1 Sold all of the A securities for $27,000 plus interest of $1,000.
Dec. 31 Received interest of $7,600 on the B and C securities. Additionally the following information was available:

.................12/31/2019
Security.....Fair Value

B....................$29,000
C.....................52,500

Required:
1. Prepare journal entries to record the preceding information.
2. Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for trading securities?

Transcribed Image Text:

1/1/2019 Fair Value Security Cost $20,000 30,000 $50,000 $25,000 29,000 $54,000 Totals