At December 31, 20x1, the available-for-sale equity security portfolio for Stef, Inc., is as follows:

Previous security fair value adjustment balance – Dr. 400

On January 20, 20x2, Stef sold security A for $15,200, and paid a brokerage fee of $100.

Required:

1. 1. Prepare the adjusting entry at December 31, 20x1.
2. 2. Show the balance sheet presentation of the investment related accounts at December 31, 20x1.
3. 3. Prepare the journal entry for the sale of security A.
4. 4. Do Questions 1, 2 & 3, assuming the investments are classified as trading securities.

Transcribed Image Text:

A B C Security. Total $17,500 12,500 23,000 Cost 53,000 Fair Value $15,000 14,000 25,500 54,500 A B C Security. Total $17,500 12,500 23,000 Cost 53,000 Fair Value $15,000 14,000 25,500 54,500

Answer rating: 100% (QA)

1 Debit AvailableforSale Equity Security Portfolio 15400 Credit Security A Fair Value Adjustment 15400 The adjusting entry at December 31 20x1 is necessary to recognize the difference between the cost ... View the full answer