Franzen Finance began operations in 2009 and invests in securities classified as trading securities. During 2009, it

Question:

Franzen Finance began operations in 2009 and invests in securities classified as trading securities. During 2009, 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, 2009, ABC common stock was trading at $39.50 per share and XYZ common stock was trading at $16.50 per share.

Required:

1. Provide the necessary adjusting entry to value the available-for-sale securities at fair market value.

2. What is the income statement effect of this adjusting entry?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...