Question
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
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. | 610 | $22,021 | ||
Pavlov Co. | 1,650 | 31,020 |
Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $43 per share and the Pavlov Co. stock had a market value of $34 per share. Galileo Company had net income of $170,300 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 | |
$ | |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started