On June 30, 2003, Paula Company purchased some stock for $5,000. This investment was worth $6,000 on December 31, 2003, and was worth $5,500 on December 31, 2004. The investment has been properly classified as a trading investment since it was purchased. The adjusting entry necessary on December 31, 2004, to record the change in market value would include a:
A) credit of $500 to an account that would be reported as Other Gains and Losses
B) credit of $500 to an account that would be reported as Other Comprehensive Income
C) debit of $500 to an account that would be reported as Other Gains and Losses
D) debit of $500 to an account that would be reported as Other Comprehensive Income
E) credit of $1,000 to an account that would be reported as Other Gains and Losses
Answer: A) credit of $500 to an account that would be reported as Other Gains and Losses
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