On January 1, 2016, Becky Corporation purchased 200 shares of Emily Corporation for $25 per share....

On January 1, 2016, Becky Corporation purchased 200 shares of Emily Corporation for $25 per share. The investment is classified as available-for-sale securities. During the year, $300 cash dividend is received from the Emily shares. At the end of the year, Emily's stock is selling for $36 per share. What would be the journal entry to adjust the securities to fair value at the end of the year?

Group of answer choices

Debit Investment in Available-for-Sale Securities and credit Unrealized Gain on Available-for-Sale Securities for $2,200

Debit Investment in Available-for-Sale Securities and credit Cash for $7,200

Debit Unrealized Gain on Available-for-Sale Securities and credit Investment in Available-for-Sale Securities for $2,200

Debit Cash and credit Investment Income for $300

Debit Investment Income and credit Unrealized Gain on Available-for-Sale Securities for $2,200

Expert Solution

Option 1 is Correct.

The Journal Entry is as follows

ekkarill92 answered 2 years ago

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