Question

At December 31, 2017, the available-for-sale debt portfolio for Skysong, Inc. is as follows. Unrealized Gain (Loss) Security Cost Fair Value $27,000 25,200 45,900 $98,100 $(4,500) 2,700 4,500 $31,500 22,500 41,400 Total $95,400 Previous fair value adjustment balance-Dr. Fair value adjustment-Dr. 2,700 720 $1,980 On January 20, 2018, Skysong, Inc. sold security A for $27,180. The sale proceeds are net of brokerage fees. (a) Your answer is correct. Prepare the adjusting entry at December 31, 2017, to report the portfolio at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Fair Value Adjustment 1980 Unrealized Holding Gain or Loss - Eq4 1980

Answer 1

Answer-b:

SKYSONG, INc. Balance Sheet 31-Dec-17 Current Assets Available for sale Securities 98,100 Stockholder's Equity Common Stock XXX,XXX Additional paid-in Capital XXX,XXX Retained Earnings XXX,XXX XXX Add: Accumulated other comprehensive income 2,700 Total Stockholder's equity XXX,XXX

Note: The unrealized holding gain could also be disclosed.