Question
During the month, Blue, Inc. purchased 1,050 shares for $5.00 per share and classified them as trading investments. At the end of the month, the
During the month, Blue, Inc. purchased 1,050 shares for $5.00 per share and classified them as trading investments. At the end of the month, the price of the securities was $6.75 per share. What adjusting entry, if any, will Blue, Inc. record when it closes its books at the end of the month to reflect this change in value?
| Dr. Valuation Allowance for Trading Investments | $7,087.50 | |
| Cr. Unrealized Gain on Trading Investments | $7,087.50 |
| Dr. Valuation Allowance for Trading Investments | $1,837.50 | |
| Cr. Unrealized Gain on Trading Investments | $1,837.50 |
| Dr. Unrealized Loss on Trading Investment | $1,837.50 | |
| Cr. Valuation Allowance for Trading Investments | $1,837.50 |
Because the trading investments were not sold during the month, no adjusting entry is required.
| Dr. Valuation Allowance for Trading Investments | $1,837.50 | |
| Cr. Realized Gain on Trading Investments | $1,837.50 |
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Advanced Financial Accounting
Authors: Richard E. Baker, Valdean C. Lembke, Thomas E. King
5th Edition
0072444126, 978-0072444124
