Tolland Financial began operations in 2010 and invests in securities classified as available for sale. During 2010,

Question:

Tolland Financial began operations in 2010 and invests in securities classified as available for sale. During 2010, it entered into the following available-for-sale security transactions:

Purchased 10,000 shares of DTR common stock at $50 per share

Purchased 44,000 shares of MJO common stock at $22 per share

At December 31, 2010, DTR common stock was trading at $62 per share and MJO common stock was trading at $21 per share.

Required:

1. Provide the necessary adjusting entry to value the available-for-sale securities at fair market value.

2. What is the income statement effect of this adjusting entry?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...