During 2012, Walker Corporation Acquired 500 Shares of Wychek Stock

question 15

Multiple Choice

During 2012, Walker Corporation acquired 500 shares of Wychek stock at $30 per share. Walker Corporation accounted for the stock as available-for-sale securities. All declines in market value are considered to be temporary. The market price per share of Wychek's stock as of December 31, 2012 and 2013, is $22.50 and $37.50, respectively. Given this information, the correct adjusting entry by walker at December 31, 2013, would include a credit to

• A) Market Adjustment - Available-for-Sale Securities of $3,750
• B) Unrealized Increase in Value of Available-for-Sale Securities - Equity of $7,500
• C) Market Adjustment - Available-for-Sale Securities of $7,500
• D) Unrealized Increase in Value of Available-for-Sale Securities - Equity of $3,750

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Definitions:

Debit Postings

Entries made on the left side of an account, indicating an increase in assets or expenses or a decrease in liabilities, equity, or revenue.

Credit Postings

Entries made in the accounts to record increases in liabilities, revenues, or owner's equity and decreases in assets or expenses.

Owner Investment

Capital contributions made by the owner(s) or shareholders into a business, either in cash or other assets, for the purpose of funding operations or expansion.

Capital

The wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.