Stock categorized as trading securities is purchased for $72,000.At year end,when the market value of the stock is $63,000,the adjusting entry that would be recorded is:
A)Allowance to Adjust Short-Term Investments to Market 9,000 Unrealized Loss on Investments 9,000
B)Unrealized Loss on Short-Term Investments 9,000 Allowance to Adjust Short-Term Investments to Market 9,000
C)Allowance to Adjust Short-Term Investments to Market 9,000 Short-Term Investments 9,000
D)Realized Loss on Investments 9,000 Short-Term Investments 9,000

Question

Quizplus · Accepted Answer

The adjusting entry for trading securities involves recognizing an unrealized loss, which is recorded by debiting "Unrealized Loss on Short-Term Investments" and crediting "Allowance to Adjust Short-Term Investments to Market" for the difference between the cost and market value.

Stock Categorized as Trading Securities Is Purchased for $72,000