Jones Ventures Inc. purchased 10% of the outstanding stock of Bowie Company. Jones paid $10 per share to acquire 10,000 shares and will treat this purchase as available-for-sale securities. Par value of the stock is $1.
Question
Jones Ventures Inc. purchased 10% of the outstanding stock of Bowie Company. Jones paid $10 per share to acquire
10,000 shares and will treat this purchase as available-for-sale securities. Par value of the stock is $1. Jones uses a calendar year, and on December 31, the market value of Bowie stock is $12 per share. What is the entry Jones needs to make on December 31?
Question 3 options:
no entry is required because the stock has not been sold
debit available-for-sale securities, $10,000; credit unrealized gain on available-for-sale securities, $10,000.
debit unrealized gain on available-for-sale securities, $20,000; credit available-for-sale securities, $20,000.
debit available-for-sale securities, $20,000; credit unrealized gain on available-for-sale securities, $20,000.
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