Trading securities purchased for $400,000 were valued at $410,000 at the end of the year. The adjusting entry to record this difference included a credit to:

Question

Quizplus · Accepted Answer

The adjusting entry to record the increase in value of trading securities involves a credit to the unrealized gain on investments account, which is a component of comprehensive income. Retained earnings would be affected only if the securities were sold, while short-term investments account is used to record the initial purchase.

Trading Securities Purchased for $400,000 Were Valued at $410,000 at the End