Balance Sheet Presentation, Trading Investments The income statement for Tri-Con

Question

Balance Sheet Presentation, Trading Investments The income statement for Tri-Con, Inc., for the year ended December 31, 2014, was as follows: Tri-Con, Inc. Income Statement (selected items) For the Year Ended December 31, 2014 Income from operations $190,000 Gain on sale of investments 17,000 Less unrealized loss on trading investments 46,000 Net income $161,000 The balance sheet dated December 31, 2013, showed a Retained Earnings balance of $784,000. During 2014, the company purchased trading investments for the first time at a cost of $213,000. In addition, trading investments with a cost of $58,000 were sold at a gain during 2014. The company paid $45,000 in dividends during 2014.

a. Determine the December 31, 2014, Retained Earnings balance. $

b. Provide the December 31, 2014, balance sheet disclosure for Trading Investments.

$  

$  

Explanation / Answer

Answer (a) Tricon Inc Retained Earning Statement Beginning Balance 784000 Add : Net Income 161000 Less : Dividend Paid -45000 Ending Balance 900000 (b) Tricon Inc Trading Investment reported under Current Assets at Their fair value Beginning Cost 213000 Less Cost of investment sold 58000 Less Unrealized Loss 46000 Fair Value of Trading Investment 109000

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