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Olivia Campbell
on Oct 16, 2024

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On February 15,Jewel Company buys bonds of Marcelo Corp.for $200,000.The investment is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.On December 31,the bonds had a fair value of $200,300.The entry to record the year-end adjustment is:

A) Debit Cash $300; credit Dividend Revenue $300.
B) Debit Fair Value Adjustment-Available-for-Sale $300; credit Unrealized Gain-Equity $300.
C) Debit Fair Value Adjustment-Available-for-Sale $300; credit Interest Revenue $300.
D) Debit Fair Value Adjustment-Available-for-Sale $300; credit Realized Gain-Income $300.
E) Debit Cash $300; credit Gain on Sale of Investments $300.

Available-for-Sale Securities

Debt or equity securities not classified as held-to-maturity or trading securities, measured at fair value, with changes in value recorded in other comprehensive income.

Fair Value

An estimate of the price at which an asset would trade in a fair transaction between willing market participants, reflecting its intrinsic value.

Year-end Adjustment

Financial adjustments made at the end of the accounting year to reflect accurate and up-to-date information in financial statements.

  • Calculate and interpret the effect of investment transactions on a company's financial statements.
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amanie heeralallOct 18, 2024
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