Answer:
The full question is as follows "The following accounts were among those reported on Good Corp.'s balance sheet at December 31, year 1: Available-for-sale securities (market value $140,000) $80,000 Preferred stock, $20 par value, 20,000 shares issued and outstanding 400,000 Additional paid-in capital on preferred stock 30,000 Retained earnings 900,000 On January 20, year 2, Good exchanged all of the available-for-sale securities for 5,000 shares of Good's preferred stock. Market values at the date of the exchange were $150,000 for the available-for-sale securities and $30 per share for the preferred stock. The 5,000 shares of preferred stock were retired immediately after the exchange. Prepare the general journal entry, without explanation, to record this event."
Date   General Journal Entry                  Debit       Credit
      Preferred stock A/c                  $100,000
       (5000*$20)     Â
      Add. paid-in capital on preferred stock  $7,500
       (30000 * 1/ 4)     Â
      Retained earnings                   $42,500
         Trading securities A/c                        $140,000
         Gain on exchange of securities                 $10,000
