Jarvis Company began operations in 2016 and reported the following marketable equity securities at December 31, 2016:

Marketable Equity Securities Cost Market

Yellow Common $13,500 $15,200

Orange Common 16,000 15,600

Beige Common 22,000 22,900

During 2017, Jarvis sold its investments in Yellow, Orange, and Beige for $57,500 before deducting transaction costs of $2,500. Later in the year, Jarvis acquired the following marketable equity securities:

1,000 shares of Purple Inc. common for $60,000;

500 shares of Lavender Inc. common for $50,000.

At December 31, 2017, the market value of Purple common was $58,000, while the market value of Lavender common was $49,000.

Assume the marketable equity securities were classified as trading when they were purchased.

Which of the following statements is correct?

A)Marketable equity securities should be reported on Jarvis December 31, 2016 balance sheet at $51,500.

B)An unrealized gain of $2,200 should be included in Jarvis net income for 2016.

C) A and B.

D) Neither A nor B.

Which of the following statements is correct?

A) At December 31, 2016, the balance in the account, fair value adjustment-trading, is a credit.

B) Jarvis can report unrealized gains and losses in its marketable equity securities on its income tax return.

C) A and B.

D) neither A nor B.

Which of the following statements is correct?

A) Jarvis should report a realized loss of $3,500 on its 2017 income statement as a result of selling its trading securities.

B) In the journal entry recording the sale of the trading securities in 2017, the account, fair value adjustment-trading, should be reduced to $0.

C) A and B.

D) Neither A nor B.

Which of the following statements is correct?

A) Marketable equity securities should be reported at $107,000 on Jarvis December 31, 2017, balance sheet.

B) At December 31, 2017, the balance in the account, fair value adjustment-trading, is a credit of $3,000.

C) A and B.

D) Neither A nor B.

Which of the following statements is correct?

A) An unrealized loss of $3,000 should be included in Jarvis net income for 2017.

B) To avoid double counting, a reclassification adjustment is reported in Jarvis net income in 2017 as a result of selling Yellow, Orange, and Beige in 2017.

C) A and B.

D) Neither A nor B.

Now for the next two, assume the marketable equity securities were classified as available for sale when they were purchased. Jarvis did not sell or purchase any other available for sale securities during 2016 or 2017. At December 31, 2017, market values of Jarvis marketable equity securities were as follows(Remember the Market Value is $49,000)

Marketable Security Securities Market

Yellow Common $14,200

Orange Common 14,800

Beige Common 22,300

Which of the following statements is correct?

A)Holding the available for sale securities during 2016 had no effect on Jarvis net income.

B)Holding the available for sale securities during 2016 increased Jarvis comprehensive income.

C)A and B.

D)Neither A nor B.

Which of the following statements is correct?

A)At December 31, 2017, the balance in the account, fair value adjustment-AFS, is a credit of $200.

B)At December 31, 2017, the balance in the account, accumulated other comprehensive income, is a debit of $2,400.

C)A and B.

D)Neither A nor B.

Which of the following statements is correct?

A)Holding the available for sale securities during 2017 decreased Jarvis other comprehensive income by $2,400.

B)Jarvis did not report any reclassification adjustments in other comprehensive income for 2017.

C)A and B.

D)Neither A nor B.