Question

The accounting records of Jamaican Importers, Inc., at January 1, 2021, included the following: Assets: Investment in IBM common shares $ 1,345,000 Less: Fair value adjustment (145,000) $ 1,200,000 No changes occurred during 2021 in the investment portfolio.

Prepare appropriate adjusting entry(s) at December 31, 2021, assuming the fair value of the IBM common shares was:_____.
1, $ 1,175,000
2, $ 1,275,000
3, $ 1,375,00

Answer 1

Answer: See explanation

Step-by-step explanation:

The appropriate adjusting entry(s) at December 31, 2021, given the fair value of the IBM common shares are represented below:

1. 31, December 2021

Dr Unrealized holding gain or loss - NI $25,000

Cr To Fair value adjustment $25,000

(To record adjustment to fair value)

2. 31, December 2021

Dr Fair value adjustment $75,000

Cr To Unrealized holding gain or loss - NI $75,000

(To record adjustment to fair value)

3. 31, December 2021

Dr Fair value adjustment $175,000

Cr To Unrealized holding gain or loss - NI $175,000

(To record adjustment to fair value)