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. 590 $20,709 Pavlov Co. 1,600 29,280 Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $42 per share and the Pavlov Co. stock had a market value of $33 per share. Galileo Company had net income of $160,500 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: 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 Fair Value Journal Entries, Available for Sale Investments The investments of Steelers Inc. include a single investment: 9,300 shares of Bengals Inc. common stock purchased on September 12, Year 1, for $12 per share including brokerage commission. These shares were classified as available for sale securities. As of the December 31, Year 1, balance sheet date, the share price declined to $10 per share. a. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, Year 1. Year 1 Sept. 12 Year 1 Dec. 31 b. How is the unrealized gain or loss for available for sale investments disclosed on the financial statements? Unrealized Gain (Loss) on Available-for-Sale Investments is reported in the of the Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 96,000 shares of Silva Company directly from one of the founders for a price of $54 per share. Silva has 300,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $235,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $897,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Year 1, Jan. 4 Year 1, July 2 Year 1, Dec. 31 b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock