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Securities available-for-sale; adjusting entries

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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

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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.

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E17-6 Barkley Co avilable for sale & trading securities: prepare adjusting entries

E17-6 (Entries for Available-for-Sale and Trading Securities) The following information is available for Barkley Company at December 31, 2007, regarding its investments.

Securities Cost Fair Value
3,000 shares of Myers Corporation Common Stock $40,000 $48,000
1,000 shares of Cole Incorporated Preferred Stock 25,000 22,000
$65,000 $70,000

Instructions
(a) Prepare the adjusting entry (if any) for 2007, assuming the securities are classified as trading.
(b) Prepare the adjusting entry (if any) for 2007, assuming the securities are classified as availablefor-
sale.
(c) Discuss how the amounts reported in the financial statements are affected by the entries in (a)
and (b).

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