The Following Information Is Related to the Short-Term Passive Investments

question 94

Multiple Choice

The following information is related to the short-term passive investments of Solo Company. Securities held on December 31, 2016, are described in the table below.
$\begin{array}{|r|r|r|r|r|r|}\hline\text { Securities } &\text { No. of }& \text { Cost/Share } &\text { Total } & \text { Value/Share } &\text { Total Market } \\&\text { Shares }&&\text { Cost }&&\text { Value }\\\hline\text { AAA } & 100 & \$ 29 & \$ 2,900 & \$ 34 & \$ 3,400 \\\hline \text { BBB } & 250 & 30 & 7,500 & 28 & 7,000 \\\hline \text { CCC } & 150 & 16 & 2,400 & 20 & 3,000 \\\hline&&&\$12,800&&\$13,400\\\hline\end{array}$
Early in 2017, Solo sold all of its investment in AAA securities for $36 per share.
The journal entry to record the sale in 2017 will include:

• A)A debit to Short-term Equity Investments for $3,400.
• B)A credit to Unrealized Loss for $200.
• C)A credit to Loss on Sale of Investments for $200.
• D)A credit to Gain on Sale of Investments for $200.

---

Definitions:

Accounts Payable

Accounts Payable is the amount of money owed by a company to its creditors for goods and services purchased on credit.

Financial Cost

Expenses associated with borrowing funds or purchasing on credit, including interest expenses, fees, and other charges.

Balance

This term refers to the total amount of money in a financial account, the difference between credits and debits in an account, or the equilibrium between opposing forces or actions.

Construction Loan

A short-term loan used to finance the building of a home or another real estate project.