On December 31, 2013, Lujack Co. held the following short-term available-for-sale securities.
| | Cost | Fair Value |
| Nintendo Co. common stock | | $ | 77,500 | | | $ | 84,475 | |
| Atlantic bonds payable | | | 31,000 | | | | 28,830 | |
| Kellogg Co. notes payable | | | 55,800 | | | | 52,452 | |
| McDonald's Corp. common stock | | | 104,625 | | | | 99,394 | |
|
Lujack had no short-term investments prior to the current period. Prepare the December 31, 2013, year-end adjusting entry to record the fair value adjustment for these securities. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
Explanation:
| Computation of Fair value adjustment |
| | Cost | Fair value | Unrealized
gain (loss) |
| Nintendo Co. common stock | $ | 77,500 | | $ | 84,475 | | | | | |
| Atlantic bonds payable | | 31,000 | | | 28,830 | | | | | |
| Kellogg Co. notes payable | | 55,800 | | | 52,452 | | | | | |
| McDonald's Corp. common stock | | 104,625 | | | 99,394 | | | | | |
| |
|
| |
|
| | | | | |
| | $ | 268,925 | | $ | 265,151 | | $ | (3,774 | ) | |
| |
|
| |
|
| |
|
|
| |
|
| Record fair value adjustment for securities ($265,151 − $268,925) = $(3,774) |
