Answer:
The journal entry to record the sale will include a,
Cash $12,400 (debit)
Profit and Loss $1,000 (credit)
Investment in Teal Company $11,400 (credit)
Explanation:
The Investment is carried in the the Financial statement at its Fair Value of $11,400, and this needs to be eliminated following the sale.
Recognize the cash proceeds following the sale of investment of $12,400.
Lastly any amount paid in excess of the Fair Value of the Investment must be recognized as profit or as loss (if fair value exceeds the cash proceeds)
