The Journal Entry to Record the Sale of an Available-

question 95

Multiple Choice

The journal entry to record the sale of an available- for- sale investment includes a loss on sale of investment for $700. The income statement will reflect:

• A)an other expense of $700.
• B)nothing, since the entry impacts only asset accounts.
• C)an extraordinary loss of $700.
• D)a decrease in net sales of $700.

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Definitions:

Options

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price within a certain period.

Held

When securities are retained in an investment portfolio without being sold.

Financial Engineering

Creating and designing securities with custom-tailored characteristics.

Securities

Securities are financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.