On January 1, 2014, Valuation Allowance for Trading Investments had a zero balance

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$41,500, and the fair value was $46,300. Prepare the December 31, 2014, adjusting journal entry to record the unrealized gain or loss on trading investments.


Answer:

2014
Dec. 31 Valuation Allowance for Trading Investments* 4,800
Unrealized Gain on Trading Investments 4,800
To record increase in fair value of
trading investments.
* Trading investments at fair value, December 31, 2014………………………… $46,300
Trading investments at cost, December 31, 2014…………………………… 41,500
Unrealized gain on trading investments………………………………………… $ 4,800