On January 1, 2015, Bergdorf Company purchased 800 shares of Cashman Company stock for $22.50 per share plus $1,200 of brokerage fees and 500 shares of Greco Company stock for $90 per share plus $1,500 of brokerage fees. The fair market value per share at December 31, 2015 and 2016 was as follows:

2015 2016

Fair Market Value Fair Market Value

Cashman Co. $28 $27

Greco Co. 91 95

Bergdorf Company intended to hold both stocks for several years. Assume that the two stock holdings are the only securities in their investment portfolio.

Required:

How would Bergdorf classify this stock? (Trading, Available-for-sale, Held-to-Maturity, Equity security or other?)

Prepare the entries necessary to adjust the securities to market value at the end of 2015 and 2016. (Be sure to specify whether your unrealized holding gains/losses are reported in income or equity).

Assume that, at the beginning of 2016, Bergdorf sold half of its shares of the Cashman Company stock for $30 per share plus $600 in brokerage selling fees. Prepare the journal entry to record the sale of the Cashman Company stock.

What other adjustments would Bergdorf need to make to its financials to account for the sale of the Cashman stock? (I am looking for a conceptual answer, not a computational one).