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Securities available-for-sale; adjusting entries

E 12-10 Securities available-for-sale; adjusting entries

The accounting records of Jamaican Importers Inc. at January 1, 2011, included the following:

Assets:

Investment in IBM common shares $1,345,000
Less: Fair value adjustment (145,000)
___________
$1,200,000

Shareholder's Equity:

Accumulated unrealized holding gains and losses 145,000

No changes occurred during 2011 in the investment portfolio.

Required:

Prepare appropriate adjusting entry(s) at December 31, 2011, assuming the fair value of the IBM common shares was:

1.$1,175,000

2.$1,275,000

3.$1,375,000

Solution Preview

1 - Debit Accumulated unrealized holding gains and losses - 25,000 (1200000 - 1175000)
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Solution Summary

The solution provides adjusting entries for Securities available-for-sale.

$2.19