Pansee Company had the following transactions pertaining to stock investments: a. February 1: Purchased 2900 shares of Hudson Company (10% ownership) at the market price of $22 per share. Pansee Company intends to keep the stock for more than one year and classifies the stock as available-for-sale.
B. June 1: Received cash dividends of $4000 on Hudson Company stock.
C. June 30: End of accounting period. Fair value of Hudson Company stock is $62,800. The company uses an allowance account to adjust the investment.
Which journal entry is prepared on June 30?
A) debit Unrealized Loss on Investment in Available-for-Sale Securities for $1000 and credit Allowance to Adjust Investment in Available-for-Sale Securities to Market for $1000
B) debit Allowance to Adjust Investment in Available-for-Sale Securities to Market for $1000 and credit Unrealized Loss on Investment in Available-for-Sale Securities for $1000
C) debit Unrealized Loss on Investment in Available-for-Sale Securities for $1000 and credit Investment in Available-for-Sale Securities for $1000
D) debit Investment in Available-for-Sale Securities for $1000 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $1000
Correct Answer:
Verified
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