At the beginning of 2018, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value):

Security

Cost

1/1/2018 Fair Value

A$20,000$25,000B30,00029,000Totals$50,000$54,000

During 2018, the following transactions occurred:

May 3Purchased C debt securities at their par value for $50,000.July 1Sold all of the A securities for $25,000 plus interest of $1,000.Dec. 31Received interest of $7,600 on the B and C securities. Additionally the following information was available:

Security

12/31/18 Fair Value

B$29,000C52,500

Required:

1. how to make journal entries to record the preceding information.

2. What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2018?

3. Next LevelWhat justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities?