USA: +1 (725) 712-1730 
Sign in
At the beginning of 2018, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value):
| Security | Cost | 1/1/18 Fair Value |
|---|---|---|
| A | $20,000 | $25,000 |
| B | 30,000 | 29,000 |
| Totals | $50,000 | $54,000 |
During 2018, the following transactions occurred:
| May 3 | Purchased C debt securities at their par value for $50,000. |
| July 1 | Sold all of the A securities for $25,000 plus interest of $1,000. |
| Dec. 31 | Received interest of $800 on the B and C securities. Additionally the following information was available: |
| Security | 12/31/18 Fair Value |
|---|---|
| B | $34,000 |
| C | 53,000 |
Required:
| 1. | Prepare journal entries to record the preceding information. |
| 2. | What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2018? |
| 3. | Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities?
ADDITIONAL INFORMATION: The General Journal should consist of 12 lines of accounts.If there are not 12 lines of accounts it will be incorrect. The only question needed is question 1. I can determine 2 and the Next Level questions myself. Thanks! |
Expert Answer
