Brooks Co. purchases various investments in trading securities at a cost of $66,000 on December 27, 2017. (This is its first and only purchase of such securities.) At December 31, 2017, these securities had a fair value of $72,000.
1. Prepare the December 31, 2017, year-end adjusting entry for the trading securities' portfolio.
2. Explain how each account in the entry of part 1 is reported in financial statements.
3. Prepare the January 3, 2018, entry when Brooks sells a portion of its trading securities (that had originally cost $33,000) for $35,000.