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Prepare the adjusting entry at december

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Question - At December 31, 2020, the available-for-sale debt portfolio for Pearl, Inc. is as follows.

Security

Cost

Fair Value

Unrealized Gain (Loss)

A

$20,125

$17,250

$(2,875)

B

14,375

16,100

1,725

C

26,450

29,325

2,875

Total

$60,950

$62,675

1,725

Previous fair value adjustment balance-Dr.

460

Fair value adjustment-Dr.

$1,265

On January 20, 2021, Pearl, Inc. sold security A for $17,365. The sale proceeds are net of brokerage fees.

Required -

(a) Prepare the adjusting entry at December 31, 2020, to report the portfolio at fair value.

(b) Show the balance sheet presentation of the investment-related accounts at December 31, 2020.

(c) Prepare the journal entry for the 2021 sale of security A.

Reference no: EM133055711

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