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Wells Inc.reported these transactions relating to marketable Trading Investments intended to generate net income and to be sold in the near term:

-The entry to record the sale of the shares on Oct 1 would include a
A)credit to Trading Investments for $3,800.
B)credit to Realized Gain for $800.
C)credit to Unrealized Gain for $800.
D)debit to Unrealized Gain for $3,800.

Question

Use the following information to answer questions 
Wells Inc.reported these transactions relating to marketable Trading Investments intended to generate net income and to be sold in the near term:
 
-The entry to record the sale of the shares on Oct 1 would include a
A)credit to Trading Investments for $3,800. 
B)credit to Realized Gain for $800. 
C)credit to Unrealized Gain for $800. 
D)debit to Unrealized Gain for $3,800.

Quizplus · Accepted Answer

The correct entry for recording the sale of shares, where there is a gain, involves crediting a Realized Gain account. This is because the gain has been realized through the sale of the shares, differentiating it from an unrealized gain, which represents an increase in value of shares that are still held by the company.

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