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Explain how to record the sale of trading securities.

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When companies record the sale of trading securities, they do so at fair market value. There are three main types of trading securities, which include trading, held-to-maturity, and available for sale. The exact recording procedure will vary depending on the type of security involved. When a company records the sale of a trading security, an adjustment is always made to the ...

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Explain how to record the sale of trading securities.

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Journal entries for a portfolio of marketable securities: available for sale and trading

In Year 1, the firm purchased a portfolio of marketable securities for $1,000, which it holds as current assets. At the end of Year 1, the portfolio had a market value of $800. During Year 2, the firm sold some of the securities for $120 which had originally cost $100, but which had a market value of $90 at the end of Year 1. At the end of Year 2, the remaining securities had a market value of $1,150.

Required:

a. Assume the firm treats its holdings as available for sale.
1. Record the entry made at the end of Year 1.
2. Record the entries made during Year 2 and at the end of Year 2.

b. Assume the firm treats its holdings as trading securities.
1. Record the entry made at the end of Year 1.
2. Record the entries made during Year 2 and at the end of Year 2.

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