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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Allowance for Available-for-Sale Securities

McCarthy Corporation’s allowance to reduce available-for-sale securities to market has a S7,200 credit balance on December 31, 2019. The market value of the available-for-sale portfolio at December 31, 2019, and December 31, 2020, are $120,000 and SI 17,000, respectively.

Required:

Prepare the adjusting entry, if any, to adjust the allowance at year end.

To determine

Concept introduction:

Available for Sale securities: Those debt or equity securities which are to be sold in nearby future are called available for sale securities. It is shown in the current assets of the company balance sheet. Some time it is also classified as the non current asset due to some different intention of the management.

To prepare:

Pass the adjustment entry and adjust the allowance at year end.

Explanation

Allowance A/c 3000

To available for sale securities A/c 300...

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