The securities portfolio for Hill Top Industries contained the following trading securities:

1. Assuming that all changes in fair value are considered temporary, what is the effect of the changes in value on the 2007 and 2008 financial statements? Give the valuation entries for these years, assuming that the market adjustment account has a $0 balance at the beginning of 2007.
2. Assume that at December 31, 2008, management believed that the market value of the Streuling Co. common stock reflected an "other-than-temporary" decline in the value of that stock. Give the entries to be made on December 31, 2008, under thisassumption.

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Securities (common stock) Randall Co. Streuling Co. Initial Cost Market Value, Dec. 31, 2007 Market Value, $10,000 7.000 21,000 $12,000 4,000 8,000 Dec. 31, 2008 $15,000 22,000 2,000 Santana Co.