In: Accounting
Kitty Company began operations in 2016 and maintains short-term
investments in trading securities. The year-end cost and fair
values for its portfolio of these investments follow.
Portfolio of Trading Securities | Cost | Fair Value | ||||
December 31, 2016 | $ | 73 | $ | 53 | ||
December 31, 2017 | 60 | 82 | ||||
December 31, 2018 | 78 | 105 | ||||
December 31, 2019 | 92 | 73 | ||||
Prepare journal entries to record each December 31 year-end fair
value adjustment for these above securities.
Date | General Journal | Debit | Credit |
Dec. 31, 2016 | Unrealised loss - Income [$73 - $53] | $20 | |
Fair value adjustment - Trading (ST) | $20 | ||
Dec. 31, 2017 | Fair value adjustment - Trading (ST) | $42 | |
Unrealised gain - Income [($82- $60) + $20] | $42 | ||
Dec. 31, 2018 | Fair value adjustment - Trading (ST) | $5 | |
Unrealised gain - Income [($105 - $78) - $22] | $5 | ||
Dec. 31, 2019 | Unrealised loss - Income [($92 - $73) + 27] | $46 | |
Fair value adjustment - Trading (ST) | $46 |