Problem: (Entries for Available-for-Sale and Trading Securities) The following information is available for Barkley Company at December 31, 2007, regarding its investments.
Securities Cost Fair Value
3,000 shares of Myers Corporation Common Stock $40,000 $48,000
1,000 shares of Cole Incorporated Preferred Stock 25,000 22,000
$65,000 $70,000
Instructions:
(a) Prepare the adjusting entry (if any) for 2007, assuming the securities are classified as trading.
(b) Prepare the adjusting entry (if any) for 2007, assuming the securities are classified as availablefor-sale.
(c) Discuss how the amounts reported in the financial statements are affected by the entries in (a) and (b).