PE 15-4A Valuing trading securities at fair value

On January 1, 2014, Valuation Allowance for Trading Investments had a zero balance. On December 31, 2014, the cost of the trading securities portfolio was $212,500, and the fair value was $203,600. Prepare the December 31, 2014, adjusting journal entry to record the unrealized gain or loss on trading investments.


Answer:

2014
Dec. 31 Unrealized Loss on Trading Investments* 8,900
Valuation Allowance for Trading Investments 8,900
To record decrease in fair value of
trading investments.
* Trading investments at fair value, December 31, 2014…………… $203,600
Trading investments at cost, December 31, 2014……………… 212,500
Unrealized loss on trading investments…………………………… $ (8,900)