On May 1,Jorge Co.purchases Radiotech bonds for $25,000.This investment is considered to be an available-for-sale investment.This is the company's first and only investment in available-for-sale securities.On July 31 (Jorge's year-end),the bonds had a market value of $28,000.Jorge should record a credit to Unrealized Gain−Equity for $3,000.

Question

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Under the available-for-sale category, the unrealized gains or losses are recorded in a separate component of equity called "Unrealized Gain (Loss) on Available-for-Sale Securities." In this case, since the market value of the bonds increased by $3,000, Jorge should record a credit to Unrealized Gain−Equity for $3,000 on July 31.