At December 31, 2022, available-for-sale debt securities for Storrer, Inc. are as follows. The securities are considered to be a long-term investment.

Security Cost Fair Value A $17,500 $16,000 B 12,500 14,000 C 23,000 21,000 $53,000 $51,000

Instructions

A. Prepare the adjusting entry at December 31, 2022, to report the securities at fair value.

B. Show the statement presentation at December 31, 2022, after adjustment to fair value.

C. E. Kretsinger, a member of the board of directors, does not understand the reporting of the unrealized gains or losses. Write a letter to Ms. Kretsinger explaining the reporting and the purposes that it serves. Prepare adjusting entries for fair value, and indicate statement presentation for two classes of securities.