(APPENDIX) ALLOWANCE FOR AVAILABLE-FOR-SALE SECURITIES McCarthy Corporation’s allowance to reduce available-for-sale securities to market is

$7,200 on December 31 (i.e., it is a credit balance), before the lower-of-cost-or-market adjustment. The cost and market value of the available-for-sale portfolio at December 31 are $120,000 and $117,000, respectively Required:

Prepare the adjusting entry, if any, to adjust the allowance at year-end.

Exercise