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Sheridan Company has the following data at December 31, 2020. Securities Cost Fair Value Trading $121,500...

Sheridan Company has the following data at December 31, 2020.

Securities Cost Fair Value

Trading $121,500 $125,000

Available-for-sale 101,100 93,800

The available-for-sale securities are held as a long-term investment.

Prepare the adjusting entries to report: (1) Trading securities at fair value and (2) Available-for-sale securities at fair value.

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Answer #1

Adjusting entry

Date account and explanation debit credit
Fair value adjustment (125000-121500) 3500
Unrealized Gain-Income 3500
(To record trading securities at fair value)
Unrealized loss-equity (101100-93800) 7300
Fair value adjustment 7300
(To record available for sale securities at fair value)
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