Analyze transactions (1 through 3) from Exercise 15-2 by showing each transaction’s effect on the accounting equation—specifically, identify the accounts and amounts (including + or −) for each.

Data From Exercise 15-2

Brooks Co. purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $72,000.

1. Prepare the December 27 entry for the purchase of debt investments.

2. Prepare the December 31 year-end fair value adjusting entry for the trading securities’ portfolio.

3. Prepare the January 3 entry when Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash.