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    Pacers Corporation: prepare the appropriate adjusting entries

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    This is a practice problem that will not be graded. I have been working on it for two days. This problem makes no sense to me at all. There is going to be a problem like this on a test, (not this problem.)

    I would like a step by step break down on how to solve for both parts A and B. I know that on part A the Securities fair value adjustment for trading is $180,000. I have no idea where I am going wrong. Please help if you can.

    See *ATTACHED* file for complete details!

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    Solution Preview

    Problem 17-8

    (a) The first class of investment is in trading securities. The adjusting entry for fair value will be to account for the unrealized profit / loss in fair value
    Unrealized gain on Dale Davis = 1,600,000-1,400,000=200,000
    Unrealized gain on Smith Electrics = 620,000-1,000,000= - 380,000
    Net unrealized gain = 200000-380000=-18000
    (the negative sign indicates loss)
    The adjusting entry will be

    Unrealized Holding Gain or Loss ...

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