Assume the same information as in E16.19 for Lilly Company. In addition, assume that the investment in the Woods Inc. stock was sold during 2026 for $195,000. At December 31, 2026, the following information relates to its two remaining investments of common stock.

Net income before any security gains and losses for 2026 was $905,000.

Instructionsa. Compute the amount of net income or net loss that Lilly should report for 2026, taking into consideration Lilly’s security transactions for 2026.

b. Prepare the journal entry to record unrealized gain or loss related to the investment in Arroyo Company stock at December 31, 2026.

Transcribed Image Text:

Investment in Arroyo Company stock Investment in Lee Corporation stock Total Cost (at purchase date) $100,000 250,000 $350,000 Fair Value (at December 31) $140,000 310,000 $450,000