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. | 560 | $18,704 | ||
| Pavlov Co. | 1,520 | 26,448 | ||
Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $40 per share and the Pavlov Co. stock had a market value of $31 per share. Galileo Company had net income of $144,900 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 | |
| $ | |
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The Routledge Companion To Auditing
Authors: David Hay, W. Robert Knechel, Marleen Willekens
1st Edition
1138363081, 978-1138363083
