Question

Journ Co. purchased short-term investments in available-for-sale securities at a cost of $55,000 on November 25, 2017. At December 31, 2017, these securities had a fair value of $51,500. This is the first and only time the company has purchased such securities 1. & 3. Prepare the December 31, 2017 year-end adjusting entry for the securities' portfolio and the April 6, 2018, entry when Journ sells one-half of these securities for $28,600. View transaction list Journal entry worksheet < 1 2 Record the fair vale adjustment for the securities at December 31, 2017 Note: Enter debits before credits General Journal Debit Credit Date Dec 31, 2016 Record entry Clear entry View general journal

Answer 1

Journal entry for worksheet 1

Date	General journal	Debit	Credit
Dec 31, 2017	Unrealised loss-Equity Account Dr	$3,500
	To Fair value adjustment- available for sale		$ 3,500

Journal entry for worksheet 2

Date	General Journal	Debit	Credit
April 06, 2018	Cash Account Dr	$28,600
	To unrealised loss-Equity (See note 1)		$1,750
	To Investment Account (see note 2)		$ 25,750
	To Gain on sale of Investment (bal.fig)		$ 1,100

Note:

1. One half of the investment is sold , hence half of the unrealised gain - other comprehensive income reversed.

2. Balance in investment account after fair value adjustment is $51,500,

so one half is $ 51,500/2 =$ 25,750.