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At the beginning of 2019, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value):

Security	Cost	1/1/19 Fair Value
A	$35,000	$44,000
B	53,000	50,000
Totals	$88,000	$94,000

During 2019, the following transactions occurred:

Transactions:
May	3	Purchased C debt securities at their par value for $50,000.
July	1	Sold all of the A securities for $44,000 plus interest of $1,000.
Dec.	31	Received interest of $1,000 on the B and C securities. Additionally the following information was available:

Security	12/31/19 Fair Value
B	$58,000
C	53,000

Required:

1.	Prepare journal entries to record the preceding information.
2.	What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2019?
3.	Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities?

GENERAL JOURNAL Score: 146/150 DATE POST. REF. DEBIT CREDIT ACCOUNT TITLE May 3 Investment in Available-for-Sale Securities Cash 50,000.00 50,000.00 Jul. 1 Cash 45,000.00 Investment in Available-for-Sale Securities 35,000.00 Gain on Sale of Available-for-Sale Securities 9,000.00 1,000.00 Interest Income Jul. 1 Unrealized Holding Gain/Loss: Available-for-Sale Securities 9,000.00 9,000.00 Allowance for Change in Fair Value of Investment Dec. 31 Cash 1,000.00 Interest Income 1,000.00 1,400.00 Dec. 31 Allowance for Change in Fair Value of Investment Unrealized Holding Gain/Loss: Available-for-Sale Securities 1,400.00

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