Reference no: EM132588655

Question 1: On February 15, Jewel Company buys bonds of Marcelo Corp. for $201,200. The investment is classified as available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On December 31, the bonds had a fair value of $202,700. The entry to record the year-end adjustment is:

A) Debit Cash $1,500; credit Dividend Revenue $1,500.

B) Debit Fair Value Adjustment-Available-for-Sale $1,500; credit Unrealized Gain-Equity $1,500.

C) Debit Fair Value Adjustment-Available-for-Sale $1,500; credit Interest Revenue $1,500.

D) Debit Fair Value Adjustment-Available-for-Sale $1,500; credit Realized Gain-Income $1,500.

E) Debit Cash $1,500; credit Gain on Sale of Investments $1,500.