DEF Company sold its AFS securities for \$40,000, which had a previous fair value of \$35,000. What is the journal entry for the realized gain?

• A. Debit Cash \$35,000; Credit Investment in AFS Securities \$35,000; Credit Realized Gain on Sale of AFS Securities \$5,000
• B. Debit Cash \$40,000; Credit Investment in AFS Securities \$40,000
• C. Debit Cash \$40,000; Credit Investment in AFS Securities \$35,000; Credit Realized Gain on Sale of AFS Securities \$5,000
• D. Debit Cash \$35,000; Credit Investment in AFS Securities \$40,000; Debit Realized Gain on Sale of AFS Securities \$5,000

Answer: (C)