12.11
a.
b.
c.
d.
e.
f.
Securities available for sale; current asset.
Debt securities held to maturity; noncurrent asset.
Securities available for sale; current asset.
Securities available for sale; noncurrent asset.
Trading securities; current asset.
Securities available for sale; noncurrent asset (although a portion of
these bonds might appear as a current asset).
12.15
10/15/2008
Marketable Securities (Security A) ..............................
Cash..........................................................................
Shareholders'
+
Equity
Assets = Liabilities
+28,000
–28,000
To record acquisition of shares of Security A.
=
Liabilities
=
Liabilities
49,000
1,000
1,000
Shareholders'
+
Equity
(Class.)
+1,000
IncSt  RE
12/31/2008
Unrealized Holding Loss on Security A Available for
Sale (Other Comprehensive Income) ......................
Marketable Securities (Security A) .....................
Assets
49,000
(Class.)
12/31/2008
Cash ...............................................................................
Dividend Revenue ....................................................
Assets
+1,000
28,000
(Class.)
11/02/2008
Marketable Securities (Security B) ..............................
Cash..........................................................................
Shareholders'
Assets = Liabilities +
Equity
+49,000
–49,000
To record acquisition of shares of Security B.
28,000
Shareholders'
+
Equity
–3,000
–3,000
To record unrealized holding loss on Security A.
(Class.)
OCInc 
AOCInc
3,000
3,000
12/31/2008
Marketable Securities (Security B) ..............................
Unrealized Holding Gain on Security B Available
for Sale (Other Comprehensive Income) ...........
Assets
=
Liabilities
6,000
6,000
Shareholders'
+
Equity
(Class.)
OCInc 
+6,000
+6,000
AOCInc
To record unrealized holding gain on Security B.
2/10/2009
Cash ...............................................................................
Realized Loss on Sale of Securities Available for Sale
(= $24,000 – $28,000) ...............................................
Marketable Securities (Security A) ...................
Unrealized Holding Loss on Security A
Available for Sale (Other Comprehensive
Income) ...........................................................
24,000
4,000
25,000
3,000
Shareholders'
Assets = Liabilities +
Equity
(Class.)
+24,000
–4,000
IncSt  RE
OCInc 
–25,000
+3,000
AOCInc
To record sale of Security A.
12/31/2009
Cash ...............................................................................
Dividend Revenue ....................................................
1,200
1,200
Shareholders'
Assets = Liabilities +
Equity
(Class.)
+1,200
+1,200
IncSt  RE
To record dividend received from Security B.
12/31/2009
Unrealized Holding Gain on Security B Available for
Sale (Other Comprehensive Income) .....................
Marketable Securities (Security B) (= $53,000
– $55,000)............................................................
Assets
=
Liabilities
Shareholders'
+
Equity
–2,000
–2,000
To revalue Security B to market value.
(Class.)
OCInc 
AOCInc
2,000
2,000
7/15/2010
Cash ...............................................................................
Unrealized Holding Gain on Security B Available for
Sale (= $6,000 – $2,000) (Other Comprehensive
Income) .....................................................................
Marketable Securities (Security B) .....................
Realized Gain on Sale of Securities Available for
Sale (= $57,000 – $49,000) ..............................
Assets =
+57,000
Liabilities
+
–53,000
To record sale of Security B.
57,000
4,000
53,000
8,000
Shareholders'
Equity
(Class.)
+8,000
IncSt  RE
OCInc 
–4,000
AOCInc
12.20
a. Sale of marketable securities during 2008: Proceeds of $14,000; gain
on sale is $4,000 = $14,000 – $10,000, so acquisition cost was $10,000.
b. Carrying value at time of sale was $13,000, so unrealized holding gain
at time of sale was $3,000 = $13,000 – $10,000.
c. The ending balance of Net Unrealized holding Gains was $2,000 less at
the end of 2008 than at the beginning, while the unrealized holding
gain on the securities sold was $3,000. The sale reduced the balance
by $3,000. Since the ending balance declined by only $2,000, the
securities on hand must have increased during the year by $1,000, so
the net decline is $2,000 = $3,000 – $1,000.
d. The Marketable Securities account increased by $8,000 = $195,000 –
$187,000 during 2008. The sale reduced the account by $13,000 and
the unrealized holding gain on the securities held at the end of the
year increased the balance by $1,000; see Part c. above. A net increase
of $9,000 after a reduction of $12,000 means the cost of new securities
is $20,000 = $8,000 + $12,000.