Question

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 $875,000 and sold the bonds on January 3, 2022, for $880,000. At December 31, the bonds had a fair value of $873,000. 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.) View transaction list Journal entry worksheet 2 3 Record the unrealized gains or losses occurring at year end. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2021 Record entry Clear entry View general journal

Answer 1

Solutions :

Buy and sale securities are valued at Fair Value.

Recording Unrealized gain/ loss at the year end

DEC 31,2021 Unrealized Loss on Buy and Sell Securities $2000

To Buy and Sale Securities $2000

( Being Entry passed for recording the loss as on

Dec 31, 2021)

Loss or Gain on sale of buy and sell securities :

Jan 3 , 2020 Bank A/c Dr $880000

To  Buy and sale Securities a/c Cr $873000
To Unrealized loss on Cr $2000

Buy and Sell Securities

To Realized Gain on Sale of Buy Dr $ 5000

and Sell Securities

( Being entry passed for sale of securities )