FKG Inc. carries the following debt investments on its books atDecember 31, 2017, and December 31, 2018. All securities werepurchased during 2017. Trading Securities: Company Cost Value, Dec.31, 2017 Value, Dec. 31, 2018 A Company $25,000 $13,000 $20,000 BCompany $13,000 $20,000 $20,000 C Company $35,000 $30,000 $25,000Available for Sale Securities: Company Cost Value, Dec. 31, 2017Value, Dec. 31, 2018 X Company $210,000 $130,000 $50,000 Y Company$ 50,000 $ 60,000 $70,000
Required:
(1.) Prepare the necessary journal entries for FKG on December31, 2017, and December 31, 2018.
(2.) What net effect would the valuation of these debtinvestments have on 2017 net income?
(3.) What net effect would the valuation of these debtinvestments have on 2018 net income?
