S&L Financial buys and sells securities which it classifies as available-for-sal
ID: 2329807 • Letter: S
Question
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, S&L purchased Coca-Cola bonds at par for $892,000 and sold the bonds on January 3, 2019, for $900,000. At December 31, the bonds had a fair value of $885,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2018 and (b) the sale of the bonds in 2019, including recognition of any unrealized gains in 2019 prior to sale and reclassification of amounts out of OCI. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Explanation / Answer
In the books of S & L Financial :
In the books of S & L Financial:
Date Account Titles Debit Credit $ $ a. December 31, 2018 Other Comprehensive Income 7,000 Investment in AFS securities 7,000 To record holding loss on Coca-Cola bonds b. January 3, 2019 Cash 900,000 Other Comprehensive Income 7,000 Investment in AFS securities 885,000 Gain on sale of AFS Investments 8,000 to record the sale of investment in AFS securitiesRelated Questions
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