Dec. 31. Closed the Luminous Publishing Inc. net income of $98,700 for 2015. Lum

Question

Dec. 31. Closed the Luminous Publishing Inc. net income of $98,700 for 2015. Luminous paid no dividends during 2015. Required: The comparative unclassified balance sheets for December 31, 2015 and 2014 are provided below. Determine the missing amounts in the unclassified balance sheet. Do not round interim calculations. Round final answers to nearest dollar. Luminous Publishing, Inc., is a book publisher. Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, 2014, are as follows: Note 2. The investment in Quest Co. stock is an equity method investment representing 30% of the outstanding shares of Quest Co. The following selected investment transactions occurred during 2015: 2015 May 5. Purchased 1,500 shares of Gypsy, Inc., at $24 per share including brokerage commission. Gypsy, Inc., is classified as an available-for- sale security. Sept. 1. Purchased $27,000 of Norton Co. 5%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on September 1 and March 1. Sept. 9. Dividends of $7,700 are received on the Quest Co. investment. Dec. 31. Quest Co. reported a total net income of $69,000 for 2015. Luminous recorded equity earnings for its share of Quest Co. net income. Dec. 31. Accrued four months of interest on the Norton bonds. Dec. 31. Adjusted the available-for-sale investment portfolio to fair value using the following fair value per-share amounts: Dec. 31. Closed the Luminous Publishing Inc. net income of $98,700 for 2015. Luminous paid no dividends during 2015.

Explanation / Answer

Note 1 Summary of Investments Held Initial Sr. No. Company Number of Purchase price Cost of Fair Value per share Fair Value Valuation shares Investment on 31/12/2015 Reserve 1 Berns Co. 1300 13 16900 12 15600 2 Dynasty Co. 700 42 29400 37 25900 3 Gypsy co. 1500 24 36000 25 37500 4 Norton Co. 270 100 27000 98 26460 Total 109300 105460 3840 Unrealised Loss on available for sale investments = 3840 Note 2 Retained Earnings can be calculated as Retained earnings at beginnning 170800 Add: Net Income Earned 98700 Retained Earnings at end 269500 Note 3 Investments in Quest co. is valued as Investment at beginning 47300 Add: Share income share from quest co. 20700 = 69000 x 30 % less: Dividend Received 7700 Investment at End 60300 Note 4 Interest receivable on Bonds = 27000 x 5% x 4/12 year 450 Balance sheet at dec 31, 2015 Assets Note Amount Current Assets Cash 158750 Accounts Receivables 93500 Available for sale investments ( at cost) 109300 Less : Valuation reserve 1 3840 Available for sale investments (Fair Value) 105460 Interest Receivables 4 450 Investment in Quest co. 3 60300 Office equipment Net 78600 Total Assets 497060 Liabilities Accounts Payable 50300 Common Stock 43300 Excess of issue price over par 137800 Retained Earnings 2 269500 Less : Unrealised loss on available for sale 1 3840 265660 investments Total Liabilities and Stockholders Equity 497060

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