On December 31, 2019, Zurich Corp. provided you with the following pre-adjustment information regarding its portfolio of investments held for short-term profit-taking:

During 2020, the Bilby Corp. shares were sold for $9,500. The fair values of the securities on December 31, 2020, were as follows: Moonstar Corp. shares $19,300 and Radius Ltd. shares $20,500.

Dividends and other investment income and losses are all reported in one investment income account.

Instructions

a. Prepare the adjusting journal entry needed on December 31, 2019.

b. Prepare the journal entry to record the sale of the Bilby Corp. shares during 2020.

c. Prepare the adjusting journal entry needed on December 31, 2020.

Transcribed Image Text:

December 31, 2019 Carrying Amount Fair Value Investments Moonstar Corp. shares Bilby Corp. shares Radius Ltd. shares Total portfolio $20,000 $19,000 20,000 20,600 $48,600 $50,000