Available-for-Sale Securities At the beginning of 2013, Ace Company had the foll
ID: 2421304 • Letter: A
Question
Available-for-Sale Securities
At the beginning of 2013, Ace Company had the following portfolio of investments in available-for-sale securities (common stock):
During 2013 the following transactions occurred:
1. Prepare journal entries to record the preceding information. For compound entries, if an amount box does not require an entry, leave it blank.
2. What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2013?
$??????
Security
Cost 12/31/12
Fair Value A $24,300 $28,800 B 28,400 27,300 Totals $52,700 $56,100
Explanation / Answer
2013 investments in available for sale securities 11300 3-May cash 11300 16-Jul cash 28800 sale investments in available for sale securities 24300 gain on sale of available for sale securities 4500 16-Jul unrealized holding gain/loss: available for sale securities 4500 adj allowance for change in fair value of investment 4500 31-Dec cash 700 divd dividend income 700 31-Dec allowance for change in fair value of investment 6000 adj unrealized holding gain/loss: available for sale securities 6000 C unrealized gain=$14200-11300= $2900 B unrealized gain 30400-27300=$3100 Balance in unrealized gain= $6000 as security A has been sold so the gain in B and C will be taken in account as $4500 of A has been debited this year but it was also credited last year so set off
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