Terra Cotta Company has the following data at December 31, 2020 for its securities: Security Cost Fair Value Available-for-sale $34,000 $39,000 Trading 46,000 42,000 Journalize the December 31 adjusting entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 (To record available-for-sale securities) Dec. 31 (To record trading securities)

Terra Cotta Company has the following data at December 31, 2020 for its securities: Security Cost Fair Value Available-for-sale $34,000 $39,000 Trading 46,000 42,000 Journalize the December 31 adjusting entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 (To record available-for-sale securities) Dec. 31 (To record trading securities)

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 19E

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On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
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