Brooks Co. purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $72,000.
1. Prepare the December 27 entry for the purchase of debt investments.
2. Prepare the December 31 year-end fair value adjusting entry for the trading securities’ portfolio.
3. Prepare the January 3 entry when Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash.