Exercise 16-12 Uttinger Company has the following data at December 31, 2017 Secu

Question

Exercise 16-12 Uttinger Company has the following data at December 31, 2017 Securities Trading Available-for-sale Cost Fair Value $119,600 $126,000 91,400 103,000 The available-for-sale securities are held as a long-term investment Prepare the adjusting entries to report: (1) Trading securities at fair value and (2) Available-for-sale securities at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit

Explanation / Answer

Answer :-   Journal entries

Fair Value Adjustment-Trading A/c Dr.

To Unrealized Gain-Income A/c (126000 - 119600)

6400

6400

Unrealized Gain or Loss-Equity A/c Dr. (103000 - 91400)

To Fair Value Adjustment-Available-for-sale A/c

11600

11600

(1). Trading securities ate fair value :-

Balance Sheet (Partial)

(2) Available for sale securities at fair value :-

  Balance Sheet (Partial)

Note :- Unrealized loss amounting to $ 11600 on Available for sale securities will be subtracted from the beginning balance of retained earnings to arrive at the ending capital balance to be shown in the liabilities side of the balance sheet.

No. Account Title & Explanation Debit ($) Credit ($) (1)

Fair Value Adjustment-Trading A/c Dr.

To Unrealized Gain-Income A/c (126000 - 119600)

6400

6400

(2)

Unrealized Gain or Loss-Equity A/c Dr. (103000 - 91400)

To Fair Value Adjustment-Available-for-sale A/c

11600

11600

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