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# AC202 Week 2 Homework Answers - Problem 15-4A(40 minutes...

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Problem 15-4A (40 minutes) Part 1 Available-for-sale securities on December 31, 2009 Security Cost Market Value 3,500 shares of Company B common stock ..... \$ 79,690 \$ 81,375 17,500 shares of Company C common stock ..... 662,600 610,312 4,200 shares of Company X common stock ..... 119,775 110,250 8,300 shares of Company Z common stock ..... 263,946 272,240 \$1,126,011 \$1,074,177 Disclosure The portfolio of available-for-sale securities would be reported on the December 31, 2009, balance sheet at its market value of \$1,074,177 . Part 2 Dec. 31 Market Adjustment—AFS* ................................ 13,508 Unrealized Loss—Equity ............................ 13,508 Adjustment to market for AFS securities.. * December 31, 2008 available-for-sale securities Cost Market Value \$ 535,300 \$ 500,000 159,380 151,000 662,600 640,938 \$1,357,280 \$1,291,938 December 31, 2009, adjustment to the Market Adjustment account: \$1,357,280 - \$1,291,938 = \$ 65,342 Cr. balance on Dec. 31, 2008 \$1,126,011 - \$1,074,177 = 51,834 Cr. balance required on Dec. 31, 2009 \$ 13,508 Dr. to adjust cost to market value Part 3 Only gains or losses realized on the sale of available-for-sale securities appear on the 2009 income statement. Unrealized gains or losses appear in the equity section of the balance sheet.

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AC202 Week 2 Homework Answers - Problem 15-4A(40 minutes...

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