In: Finance
At the beginning of first quarter 2015, the bank buys an available-for-sale security for $15. At the end of the first quarter the price is $17. The bank sells the security at $18 during the second quarter 2015.
During the second quarter 2015, as the result of the sale, the bank shareholder's equity ______, the retained profit ________ and the capital reserve ________.
A. increased by $1; increased by $3; decreased by $2
B. increased by $3; increased by $1; increased by $2
C. increased by $1; increased by $3; increased by $2
D. decreased by $1; decreased by $3; increased by $2
Question | |
Information in the Question | |
Labels | Amount ($) |
Available For Sale Securities Buying Cost - Beginning of First Quarter 2015 | 15.00 |
Available For Sale Securities Market Value of Security at the end First Quarter 2015 | 17.00 |
Available For Sale Securities Selling Price at the End of Second Quarter 2015 | 18.00 |
The bank shareholder's equity | ? |
The retained profit | ? |
The capital reserve | ? |
Journal Entries | ||||
Transaction | Date | Particulars | Debit ($) | Credit ($) |
Purchase of Available For Sale Securities | Beginning Q1 | Available For Sale Securities | 15 | |
To Bank A/c | 15 | |||
Change in Value of Available For Sale Securities | Ending Q1 | Available For Sale Securities | 2 | |
To Gain Available For Sale Securities (Other Comprehensive Income) | 2 | |||
Sale of Available For Sale Securities | Beginning Q2 | Bank A/c | 18 | |
Available For Sale Securities | 18 |
Option A
During the second quarter 2015, as the result of the sale, the bank shareholder's equity increase by $1, the retained profit increase by $3 and the capital reserve decrease by $1