The investments of Giving Tree, Inc., include a single investment: 9,000 shares of Cardio solutions, Inc. common stock purchased on March 3, 2012, for $22 per share including brokerage commission. These shares were classified as trading securities. As of the December 31, 2012, balance sheet date, the share price increased to $29 per share.
a. Journalize the entries to acquire the investment on March 3, and record the adjustment to fair value on December 31, 2012.
b. How is the unrealized gain or loss for trading investments disclosed on the financial statements?

a.

2012

Mar. 3 Investments-Cardio Solutions, Inc. Stock....... 198,000

Cash........................................................................... 198,000

9,000 shares × $22 per share.

Dec. 31 Valuation Allowance for Trading Investments.... 63,000

Unrealized Gain on Trading Investments.................. 63,000

To record increase in fair value of

trading investments, 9,000 shares ×

($29 per share - $22 per share).

b. The unrealized gain or unrealized loss for trading investments is disclosed in the income statement as "other income" (or a separate item if significant). Unrealized losses would be deducted in determining net income, while un-realized gains would be added in determining net income.