Brief Exercise 17-04 Sarasota Corporation purchased trading investment bonds for $47,000 at par. At December 31, Sarasota received annual interest of $1,880, and the fair value of the bonds was $44,400. Prepare Sarasota' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)

Dr Debt Investments (Trading) $47,000

Cr Cash $47,000

(b)

Dr Cash $1,880

Cr Interest Revenue $1,880

(c)Dr Unrealized Holding Gain or Loss—Income 2$,600

Cr Fair Value Adjustment (Trading) $2,600

Explanation:

(a)

Dr Debt Investments (Trading) $47,000

Cr Cash $47,000

(b)

Dr Cash $1,880

Cr Interest Revenue $1,880

(c)

Dr Unrealized Holding Gain or Loss—Income 2$,600

Cr Fair Value Adjustment (Trading)

($47,000 – $44,400) $2,600

In a case were it’s trading security, unrealized loss/gain will be reported in the net income (income statement), and therefore in retained earnings and will affect the shareholder’s equity.

was my answer wrong?

i would say iii (3) because in order to compare a price you have to use as a reference other near stores because it's its

hope i explained myself