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The Following Information Related to the Marketable Security Investments of Solo

question 97

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The following information related to the marketable security investments of Solo Company. Securities held on December 31, 2009, as described in the table below. AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security. The following information related to the marketable security investments of Solo Company. Securities held on December 31, 2009, as described in the table below. AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.   Early in 2010, the company sold 50 shares of BBB for $26 per share. The journal entry to record the 50 shares of BBB stock sold in 2010 will include: A)  A credit to Trading Securities for $1,400. B)  A credit to Unrealized Loss on Trading Securities for $100. C)  A credit to Realized Loss on Sale of Trading Securities for $100. D)  A debit to Realized Gain on Sale of Trading Securities for $100. Early in 2010, the company sold 50 shares of BBB for $26 per share. The journal entry to record the 50 shares of BBB stock sold in 2010 will include:


Definitions:

Subjective Risk

The perceived level of risk based on an individual's personal judgment, as opposed to objectively measured risk.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that has priority over common stock dividends.

Market Risk Premium

The additional return an investor expects for holding a risky market portfolio instead of risk-free assets.

Dividend Amount

The cash value paid out to shareholders from a company's earnings.

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