Question

9. On August ​20, 2018​, Macak​, Co. decides to invest excess cash of $ 3 comma 000 by purchasing Buffalo​, Inc. bonds. At​ year-end, December ​31, 2018​, the market price of the bonds was $ 2 comma 400. The investment is categorized as​ available-for-sale debt. Journalize the adjusting entry needed at December ​31, 2018.

Answer 1

Answer: Please refer to explanation.

Step-by-step explanation:

Since it is an Available for Sale debt, we journalize it as follows

2018

Dec. 31

DR Unrealized holding loss on AFS 600

CR .Fair value adjustment - AFSI 600

(To record available-for-sale investments at fair value)

Calculation,

= Cost Price - Market Price

=($3000 - $2400)

= $600

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