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Prepare the journal entries to record the information

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Question - In 2019, a company purchases debt securities at a par value of $650,000. Their year-end value is $676,000. In 2020, these securities are sold for $682,500 and new securities are purchased for $910,000. At the end of 2020, the securities have not yet been sold, and have a value of $780,000.

Required - Prepare the journal entries to record the above information for 2019 and 2020, assuming that:

a. The securities are categorized as trading securities.

b. The securities are categorized as AFS securities, and (1) the company intends to sell the securities held at the end of 2020 before the loss is recovered, or (2) the company intends to hold the securities, and their decline in value is attributed to expected credit losses, or (3) the company intends to hold the securities, and their decline in value is attributed to a rise in market interest rates.

Reference no: EM133105790

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