Malox Co. purchased short-term investments in available-for-sale securities at a

Question

Malox Co. purchased short-term investments in available-for-sale securities at a cost of $100,000 on November 25, 2009. At December 31, 2009, these securities had a market value of $94,000. This is the first and only time the company has purchased such securities.


Requirement 1:

Prepare the December 31, 2009, year-end adjusting entry for the securities' portfolio. (Omit the "$" sign in your response.)


Date General Journal Debit Credit
Dec. 31, 2009






Requirement 2:

Prepare the April 6, 2010, entry when Malox sells one-fourth of these securities for $27,000



Date General Journal Debit Credit
Apr. 6, 2010

Explanation / Answer

The value of the securities as on nov 25 2009 is = 100,000 The value of the securities as on dec 31 2009 is = 94,000 Credit sales allowance = 0.5% 1.Hence the year end adjusting entry = 100000*0.5/100 = 500$ 2.When mallok sells 1/4th of its securities It has got 23500$ So the entry becomes 27000 -23500 =...

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