Balance Sheet Presentation of Available-for-Sale Investments During Year 2, Cope

Question

Balance Sheet Presentation of Available-for-Sale Investments

During Year 2, Copernicus Corporation held a portfolio of available-for-sale securities having a cost of $203,900. There were no purchases or sales of investments during the year. The market values at the beginning and end of the year were $240,600 and $193,700, respectively. The net income for Year 2 was $187,600, and no dividends were paid during the year. The Stockholders' Equity section of the balance sheet was as follows on December 31, Year 1:

Prepare the Stockholders' Equity section of the balance sheet for December 31, Year 2.

Copernicus Corporation
Stockholders' Equity
December 31, Year 1 Common stock $43,000 Paid-in capital in excess of par 322,000 Retained earnings 424,100 Unrealized gain on available-for-sale investments 36,700 Total $825,800

Explanation / Answer

Copernicus Corporation Balance Sheet (selected Stockholders' Equity items) December 31, Year 2 Common stock 43000 Paid-in capital in excess of par 322000 Retained earnings 611700 =424100+187600 Unrealized gain (loss) on available-for-sale investments -10200 =193700-203900 Total stockholders’ equity 966500

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