Marco Insurance Marco Insurance acquired shares of Penny Systems' common stock on December 28, 2013, for $400,000 and classified them as trading securities.The fair value of these securities on December 31, 2013, was $402,000.Marco Insurance sold these shares on January 3, 2014, for $405,000.
(Refer to the Marco Insurance) The journal entries to record the sale of trading securities at a gain on January 3, 2014.

Question

Quizplus · Accepted Answer

The correct journal entry to record the sale of trading securities at a gain includes debiting Cash for the sale amount ($405,000), crediting Marketable Securities for the carrying amount at fair value on the balance sheet date ($402,000), and recognizing the difference as a Realized Gain on Sale of Trading Securities ($3,000). This reflects the increase in cash from the sale, the removal of the asset from the books, and the realization of the gain upon sale.

Marco Insurance Marco Insurance Acquired Shares of Penny Systems' Common