On February 15, Jewel Company buys bonds of Marcelo Corp. for $201,700. The investment is classified as available-for-sale securities. This is the company’s first and only investment in available-for-sale securities. On December 31, the bonds had a fair value of $203,700. The entry to record the year-end adjustment is: Debit Fair Value Adjustment-Available-for-Sale $2,000; credit Unrealized Gain-Equity $2,00.Debit Fair Value Adjustment-Available-for-Sale $2,000; credit Interest Revenue $2,000.Debit Fair Value Adjustment-Available-for-Sale $2,000; credit Realized Gain-Income $2,000.Debit Cash $2,000; credit Gain on Sale of Investments $2,000.Debit Cash $2,000; credit Dividend Revenue $2,000.

At the time of reporting period, the gain or loss on holding the bond should be accounted. If the…

Answered: On December 31, the bonds had a fair…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On February 15, Jewel Company buys bonds of Marcelo Corp. for $201,700. The investment is classified as available-for-sale securities. This is the company’s first and only investment in available-for-sale securities. On December 31, the bonds had a fair value of $203,700. The entry to record the year-end adjustment is:

Debit Fair Value Adjustment-Available-for-Sale $2,000; credit Unrealized Gain-Equity $2,00.
Debit Fair Value Adjustment-Available-for-Sale $2,000; credit Interest Revenue $2,000.
Debit Fair Value Adjustment-Available-for-Sale $2,000; credit Realized Gain-Income $2,000.
Debit Cash $2,000; credit Gain on Sale of Investments $2,000.
Debit Cash $2,000; credit Dividend Revenue $2,000.

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