Question

An investment in common stock acquired during the year at a cost of $40,000 has a year-end market value of $42,250. The year-end adjusting entry requires a: A. debit to Unrealized Gain on Investment for $2,250. B. debit to Allowance to Adjust Investments to Market for $2,250. C. debit to Long-Term Investments for $2,250. D. credit to Allowance to Adjust Investments to Market for $2,250.

Answer 1

c. Debit to Long Term investments for $2,250

Step-by-step explanation:

The investment have increased therefore it will be debited with corresponding effect to unrealized gain on such investment.

Option C is correct.