[Anonymous]

Highly confused on the journal entry for available for sale security. Becker book shows it one way, simulation shows it another way:

Book:

Dr. Cash for sales price

Dr. Realized loss (selling price – security original cost)

Cr Available-For Sale Security (for FV at most recent year end)

Cr. Unrealized loss (for what was already put in from previous years)

Sim:

Dr. Cash for sales price

Dr. Realized loss (selling price – original cost)

Dr. Valuation Account

Cr. Available-For Sale Security (for original cost)

Cr. Unrealized loss (for what was already put in from previous years)

So do you credit the security/take it off the books for it’s cost and then the realized gain is selling price – FV at most recent year end? Or take the security off the books for the FV at most recent year end and then book the realized gain. as selling price – original cost? The second sim accounts for the difference by not only crediting the unrealized loss, but debiting the valuation account, so in essence, reversing the previous years unrealized entries. The first entry only hits the unrealized loss account, which allows the available for sale security to be credited for its fv at last year end (which takes into account cost less valuation account in year 1). Highly confused on which way to go here because the amount to take the security off the books is different on both due to making an entry or not (reversing) the valuation account.

[Anonymous]

actually I answered my own question, you dr. the valuation account and credit the security for the original cost when they have been using the valuation account. If not, no dr. obviously needed for the valuation and credit security at most recent FV.

[Anonymous]

actually I answered my own question, you dr. the valuation account and credit the security for the original cost when they have been using the valuation account. If not, no dr. obviously needed for the valuation and credit security at most recent FV.

[Author]

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