Short Problems
1.Trading securities were purchased at a cost of $5,000. Their current market value is $4,000. Prepare the December 31 adjusting journal entry.
2.Prepare the December 31 journal entry that adjusts available-for-sale securities that were purchased at a cost of $5,000 when current market value is $4,000.
3.On December 31, the cost and market price of trading securities are $5,000 and $9,000, respectively. Give the appropriate adjusting entry on December 31.
4.On December 31, the cost and market price of available-for-sale securities are $5,000 and $9,000, respectively. Give the appropriate adjusting entry on December 31.
5.
On December 31, 2010, available-for-sale securities with an original cost of $10,000 have a carrying value on the balance sheet equal to their market value of $12,000. On January 5, 2011, those securities are sold for $11,000. Give the appropriate entry to record the sale of the available-for-sale securities.
6.On December 31, 2010, trading securities with an original cost of $45,000 have a market value of $47,000. On January 11, 2011, those trading securities are sold for $51,000. Determine the gains or losses in 2009 and 2010 associated with these trading securities. Clearly label whether the gains or losses are realized or unrealized. Name the financial statement on which each is reported.