1. The Janjua Company had the following account balances at 1/1/18:

Common Stock $65,000

Treasury Stock (at cost) 13,400

Paid-in-Capital in Excess of Par 82,000

Investments in AFS Debt Securities 42,000

FVA (AFS) 500 debit

Retained Earnings 20,000

On that date, the Accumulated OCI account was at its proper balance.

There were no sales or purchases of Common Stock or Investments during 2018. Prior to any adjusting journal entries related to the investments, 2018 Net Income was $10,300. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/2018 was $40,000.

Required: (a) Prepare the 12/31/18 journal entry to adjust the investment to fair value.

(b) Prepare the complete 12/31/18 Equity section of the balance sheet.