Brooks Co. purchases various investments in trading securities at a cost of $55,

Question

Brooks Co. purchases various investments in trading securities at a cost of $55,000 on December 27, 2017. (This is its first and only purchase of such securities.) At December 31, 2017, these securities had a fair value of $63,000.

1. & 3. Prepare the December 31, 2017, year-end adjusting entry for the trading securities' portfolio and the January 3, 2018, entry when Brooks sells a portion of its trading securities (that had originally cost $27,500) for $29,500. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

December 31, 2017 Investment in trading securities ($63,000-$55,000) $    8,000 Unrealized gain on trading securities $    8,000 (To record unrealized gain on security recorded) January 3, 2018 Cash $ 29,500 Investment in trading securities   $ 27,500 Realzied gain on sale of trading securities (To record sale of securities)

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