260 Securities

Assets

Cash & Contracts

Synopsis

Account 260 is established to record the value of financial investments in stock and bonds owned by the dealership.

Debits

Credits

The Cost of readily marketable securities acquired which are intended to be temporary investments

The book value of securities intended to be retained as long-term investments
The writedown to market value
The book value of securities sold and otherwise disposed of

Example 1

Record the purchase $15,000 of stock in a publicly traded company intended as a temporary investment.

Journal: Cash Disbursements

Entry:		Debit	Credit
Account 260	Securities	$15,000
Account 202	Cash in Bank		$15,000

Example 2

Record the sale of the above securities for $16,000.

Journal: Cash Receipts

Entry:		Debit	Credit
Account 202	Cash in Bank	$16,000
Account 260	Securities		$15,000
Account 905	Other Income		$1,000

Example 3

Record the $1,500 write-down of the securities held for temporary investment to market value.

Journal: General Journal

Entry:		Debit	Credit
Account 955	Other Deductions	$1,500
Account 260	Securities		$1,500

Comments

A debit balance represents the book value of stocks, bonds and other securities of a readily marketable nature, which are intended to be temporary investments.

Note:

A detail of these securities should be made in this account or in a suitable subsidiary record.

Gains or losses on disposition of these items should be recorded in Account 905, Other Income or Account 955, Other Deductions, as applicable.