S&L Financial buys and sells securities expecting to earn profits on short-term differences in price. On December 27, 2021, S&L purchased Coca-Cola bonds at par for $886,000 and sold the bonds on January 3, 2022, for $892,500. At December 31, the bonds had a fair value of $882,000.
Prepare journal entries to record (a) any unrealized gains or losses occurring in 2021 and (b) the sale of the bonds in 2022. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
SOLUTION:
Date | Particulars | Debit | Credit |
31-Dec-21 | Unrealized holding loss-NI | 4,000 | |
Fair value adjustment (886,000 - 882,000) | |||
4,000 | |||
03-Jan-22 | Fair value adjustment | 6,500 | |
Unrealized holding loss-NI (892,500 - 886,000) | 6,500 | ||
03-Jan-22 | Cash | 892,500 | |
Iinvestment in Coca-cola bonds | 886,000 | ||
Fair value adjustment | 6,500 |
S&L Financial buys and sells securities expecting to earn profits on short-term differences in price.
S&L Financial buys and sells securities expecting to earn profits on short-term differences in price. On December 27, 2021, S&L purchased Coca-Cola bonds at par for $886,000 and sold the bonds on January 3, 2022, for $892,500. At December 31, the bonds had a fair value of $882,000. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2021 and (b) the sale of the bonds in 2022. (If no entry is required for a transaction/event, select...
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