15-3.6 Balance Sheet Presentation of Available-for-Sale Investments

During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows:

Security	Shares Purchased	Cost
Hawking Inc.	910		$48,776
Pavlov Co.	2,470		68,913

Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $64 per share and the Pavlov Co. stock had a market value of $50 per share. Galileo Company had net income of $377,800 and paid no dividends for the year ending December 31, Year 1. 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.

Galileo Company
Balance Sheet (selected items)
December 31, Year 1
Assets
Current Assets:
Available-for-Sale Investments, at Cost	$
Plus Unrealized Gain (Loss) on Available-for-Sale Investments		$

b. Prepare the Stockholders' Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.

Galileo Company
Balance Sheet (selected Stockholders' Equity items)
December 31, Year 1
Stockholders' Equity
Retained Earnings	$
Unrealized Gain (Loss) on Available-for-Sale Investments