Account for short-term investments
Response to the following problem:
Inverness Investments purchased Dorr Corp. shares as a trading security on December 16 for $85,000.
1. Suppose the Dorr Corp. shares decreased in value to $78,000 at December 31. Make the Inverness journal entry to adjust the Investment in Trading Securities account to market value.
2. Show how Inverness would report the Investment in Trading Securities on its balance sheet and the unrealized gain or loss on its income statement.