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At the beginning of first quarter 2015, the bank buys an available-for-sale security for $15. At...

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

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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

jeff jeffy answered 4 months ago
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