A Company Has a Long-Term Investment in Available-For-Sale Securities

question 104

Multiple Choice

A company has a long-term Investment in Available-for-Sale Securities.The intent is to hold the stock investment for many years,but not until maturity.The investor's percentage ownership is 5%.On January 1,2014,the purchase date,the cost of the stock investment was $100,000.On December 31,2014,the fair value of the investment is $99,000.An allowance account is used to write-down the investment.On January 10,2015,the investor sold the stock for $95,000.What journal entries are required on January 10,2015?

• A)debit Allowance to Adjust Investment in Available-for-Sale Securities to Market for $1,000 and credit Unrealized Loss on Investment in Available-for-Sale Securities for $1,000
• B)debit Cash for $95,000,debit Loss on Sale of Investment in Available-for-Sale Securities for $5,000 and credit Investment in Available-for-Sale Securities for $100,000
• C)debit Cash for $95,000,debit Loss on Sale of Investment of Available-for-Sale Securities for $4,000 and credit Investment in Available-for-Sale Securities for $99,000
• D)A and B

---

Definitions:

Chlamydia

A common sexually transmitted infection caused by the bacterium Chlamydia trachomatis, often presenting with few or no symptoms but can lead to serious reproductive issues if untreated.

Sperm Mature

Sperm maturation is the process by which spermatozoa develop and undergo changes to attain the capability of fertilizing an oocyte, often occurring in the epididymis for mammals.

Epididymis

Duct where sperm mature; empties into a vas deferens.