Brooks Co. purchases debt investments as trading securities at a cost of $72,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $85,000. 1. Prepare the December 27 entry for the purchase of debt investments. 2. & 3. Prepare the December 31 year-end fair value adjusting entry for the trading securities' portfolio and the January 3 entry when Brooks sells a portion of its trading securities (costing $36,000) for $39,250 cash.

1-Record purchase of trading securities

2-1 Record the year-end adjustment to fair value, if any.

2-2 Record sale of trading securities