Gard Company completes the following transactions related to its short-term debt investments.

Required

1. Prepare journal entries for the transactions.

2. Prepare a year-end adjusting journal entry as of December 31 if the fair values of the debt securities held by Gard are $9,600 for FedEx and $22,000 for Ajay. (This year is the first year Gard Company acquired short-term debt investments.)

3. Computation of unrealized gain or loss, along with the adjusting entry, follows.
   

  

Debt Investments-AFS Jan. I May 8 12,975 Sep. 2 4,325 Oct. 2 25,600 Dec. 31 bal. 34,250 Fair Value Adj.-AFS Jan. I Dec. 31 adj. 2,650 Dec. 31 bal. 2,650