The journal entry to record the sale of an available-for-sale investment includes a gain on sale of investment of $500. The income statement will reflect:

Question

Quizplus · Accepted Answer

The gain on sale of the available-for-sale investment is recorded as a non-operating income on the income statement, under the category of "other income." Therefore, option B - "another income of $500" is the correct answer. Option A is incorrect because the sale of the investment does not impact net sales directly. Option C is incorrect because the gain on sale of investment is not an extraordinary gain but a regular non-operating income. Option D is also incorrect because the sale of the investment impacts both asset and equity accounts, thus affecting the income statement indirectly.

The Journal Entry to Record the Sale of an Available-For-Sale