Santos Corporation Has the Following Trading Portfolio of Debt Investments

question 112

Essay

Santos Corporation has the following trading portfolio of debt investments as of December 31, 2017. $\begin{array}{lrr}\text { Security } & \text { Cost } & \text { Fair Value }\\\mathrm{A} & \$ 17,000 & \$ 16,000 \\\mathrm{~B} & 23,000 & 25,000 \\\mathrm{C} & 32,000 & 28,000 \\\hline &\$72,000&\$69,000\end{array}$ On January 22, 2018, Santos Corporation sold security C for $30,000.
Instructions
(a) Prepare the adjusting entry for Santos Corporation on December 31, 2017 to report the portfolio at fair value.
(b) Indicate the balance sheet and income statement presentation of the fair value data for the Santos Corporation at December 31, 2017.
(c) Prepare the journal entry for the 2018 sale.

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Definitions:

Engel Curve

A graph showing how household expenditure on a particular good or service varies with household income.

Normal Good

A good for which demand increases as the income of an individual increases, holding other factors constant.

Engel Curve

A graphical representation that shows the relationship between a consumer's income and their expenditure on a particular good, illustrating how consumption changes with income.

Utility Function

A representation of how consumer preferences over a set of goods and services are ordered, indicating the level of satisfaction derived from different bundles of goods.