Trading Securities Bark Company invested in the following securities:

All of the securities are common stock and all are considered to be trading securities by Bark Company. Bark Company received no dividends from its investments in 2000; however, dividends of $7,000, $1,000, and $1,400 were received from Short, Long, and Medium, respectively, during 2001.
The chair of the executive committee of Bark Company decides she needs more information to determine whether or not the company should continue to invest excess cash in this manner. You are asked to:

a. Compute the amount of net income reported each year, assuming Bark Company reported operating earnings (ex-cluding income from investments) of $90,000 in 2000 and $110,000 in 2001.

b. Explain why taking into consideration both the dividends received and the change in market value is important in evaluating the performance of equity securities classified as trading securities.

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Market Price Date of Purchase Name of Company Amount Dec. 31, Dec. 31, Paid 2000 2001 Feb., 2000 Short $80,000 $70,000 $72,000 Mar., 2000 Long 45,000 40,000 56,000 Jun., 2000 Medium 22,000 32,000 25,000