Lipscomb Inc. purchased a portfolio of available-for-sale securities in 2009, its first year of operations. The cost and fair value of this portfolio on December 31, 2009, was as follows:
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On May 10, 2010, Lipscomb purchased 700 shares of Nova Inc. at $50 per share plus a $150 brokerage fee. On December 31, 2010, the available-for-sale security portfolio had the following cost and fair value:
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Provide the journal entries to record the following:
(a) The adjustment of the available-for-sale security portfolio to fair value on December 31, 2009.
(b) The May 10, 2010, purchase of Nova Inc. stock.
(c) The adjustment of the available-for-sale security portfolio to fair value on December 31,2010.
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