The investments of Macon, Inc. include a single investment: 12,400 shares of Pac
ID: 2477437 • Letter: T
Question
The investments of Macon, Inc. include a single investment: 12,400 shares of Pacific Wave, Inc. common stock purchased on August 10, 2014, for $14 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, 2014, balance sheet date, the share price declined to $12 per share.
Journalize the entries to acquire the investment on August 10, and record the adjustment to fair value on December 31, 2014.
2014 Aug. 10
2014 Dec. 31
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During 2014, its first year of operations, Myron Company purchased two available-for-sale investments as follows:
Assume that as of December 31, 2014, the Olson Products, Inc., stock had a market value of $37 per share and the Reynolds Co. stock had a market value of $29 per share. Myron Company had net income of $123,700, and paid no dividends for the year ending December 31, 2014. All of the available-for-sale investments are classified as current assets.
a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.
Myron Company
Balance Sheet (selected Current Asset items)
December 31, 2014
Assets
Current Assets:
$
$
b. Prepare the Stockholders' Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.
Myron Company
Balance Sheet (selected Stockholders' Equity items)
December 31, 2014
Stockholders' Equity
$
Hide
Journalize the entries to acquire the investment on August 10, and record the adjustment to fair value on December 31, 2014.
2014 Aug. 10
2014 Dec. 31
-------------------------------------------
During 2014, its first year of operations, Myron Company purchased two available-for-sale investments as follows:
Security Shares Purchased Cost Olson Products, Inc. 520 $15,964 Reynolds Co. 1,410 22,560Assume that as of December 31, 2014, the Olson Products, Inc., stock had a market value of $37 per share and the Reynolds Co. stock had a market value of $29 per share. Myron Company had net income of $123,700, and paid no dividends for the year ending December 31, 2014. All of the available-for-sale investments are classified as current assets.
Hidea. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.
Myron Company
Balance Sheet (selected Current Asset items)
December 31, 2014
Assets
Current Assets:
$
$
Hideb. Prepare the Stockholders' Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.
Myron Company
Balance Sheet (selected Stockholders' Equity items)
December 31, 2014
Stockholders' Equity
$
Explanation / Answer
1.
August 10 2014
Investments - avaialble for sale securities $173,600 (12,400 * $14)
Cash $173,600
December 31,2014
Loss on available for sale securities $24,800 (12,400 *2 )
Investment in avaialble for sale securities $24,800
2.
b. Gain on olson products Inc = 19,240 - 15,964 = $3,276
Gain on reynolds co. = 40,890 - 22,560 = $18,330
Total gain on available for sale securities = $21,606
Current assets amount amount Olson Products, Inc. (520*37) $19,240 Reynolds Co. (1,410 * 29 ) $40,890 $60,130Related Questions
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