Stock categorized as trading securities is purchased for $144,000.At year end,when the market value of the stock is $126,000,the adjusting entry that would be recorded is:
A) Allowance to Adjust Short-Term Investments to Market 18,000
Unrealized Loss on Investments 18,000
B) Unrealized Loss on Short-Term Investments 18,000
Allowance to Adjust Short-Term Investments to Market 18,000
C) Allowance to Adjust Short-Term Investments to Market 18,000
Short-Term Investments 18,000
D) Realized Loss on Investments 18,000
Short-Term Investments 18,000

Question

Quizplus · Accepted Answer

The adjusting entry for trading securities involves recognizing an unrealized loss, which is recorded by debiting "Unrealized Loss on Short-Term Investments" and crediting "Allowance to Adjust Short-Term Investments to Market" for the difference between the purchase price and market value.

Stock Categorized as Trading Securities Is Purchased for $144,000