Reclassification of Securities
Bicknel Technologies Inc. purchased the following securities during 2007:
|
|
|
|
Market Value, |
|
Security |
Classification |
Cost |
Dec 31, 2007 |
|
A |
Trading |
$ 2,000 |
$ 4,000 |
|
B |
Trading |
7,000 |
6,000 |
|
C |
Available for sale |
18,000 |
16,000 |
|
D |
Available for sale |
5,000 |
4,000 |
|
E |
Held to maturity |
14,000 |
15,000 |
At the beginning of 2007, Bicknel Technologies had a zero balance in each of its market adjustment accounts. During 2008, after the 2007 financial statements had been issued, Bicknel determined that security B should be reclassified as an available for sale security and security C should be reclassified as a trading security. The market values on the date of the transfer are $5,500 for security B and $17,000 for security C.
Prepare the journal entries to do the following:
1. Adjust the portfolio of securities to its market value at December 31, 2007.
2. Reclassify security B as an available for sale security in 2008.
3. Reclassify security C as a trading security in 2008.