Question: Franzen Finance began operations in 2012 and invests in securities

Franzen Finance began operations in 2012 and invests in securities classified as trading securities. During 2012, it entered into the following trading security transactions:
Purchased 20,000 shares of ABC common stock at $ 38 per share
Purchased 32,000 shares of XYZ common stock at $ 17 per share
At December 31, 2012, ABC common stock was trading at $ 39.50 per share and XYZ common stock was trading at $ 16.50 per share.
Required:
1. Prepare the necessary adjusting entry to value the trading securities at fair market value.
2. Conceptual Connection: What is the income statement effect of this adjusting entry?

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  • CreatedSeptember 22, 2015
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