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Prepare the journal entry to adjust the investment

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Reference no: EM132668429

The Janjua Company had the following account balances at 1/1/18:

Common Stock $65,000

Treasury Stock (at cost) 13,400

Paid-in-Capital in Excess of Par 82,000

Investments in AFS Debt Securities 42,000

FVA (AFS) 500 debit

Retained Earnings 20,000

  • On that date, the Accumulated OCI account was at its proper balance.
  • There were no sales or purchases of Common Stock or Investments during 2018. Prior to any adjusting journal entries related to the investments, 2018 Net Income was $10,300. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/2018 was $40,000.

Required:

Problem (a) Prepare the 12/31/18 journal entry to adjust the investment to fair value.

Problem (b) Prepare the complete 12/31/18 Equity section of the balance sheet.

Reference no: EM132668429

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