Balance Sheet Presentation of Securities that management expects to sell in the future but which are not actively traded for profit.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.	780		$35,958
Pavlov Co.	2,110		50,640

Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $55 per share and the Pavlov Co. stock had a market value of $43 per share. Galileo Company had net income of $278,000 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 Available-for-Sale Investments, at Cost Available-for-Sale Investments, at Fair Value Common Stock Retained Earnings Unrealized Gain (Loss) on Available-for-Sale Investments	$
Plus Valuation Allowance for Available-for-Sale Investments Less Retained Earnings Less Unrealized Gain (Loss) on Available-for-Sale Investments Less Valuation Allowance for Available-for-Sale Investments Plus Retained Earnings Plus Unrealized Gain (Loss) on Available-for-Sale Investments Plus Valuation Allowance for Available-for-Sale Investments		$

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b. Prepare the Stockholders' Equity section of the balance sheet to reflect the earnings and Changes in the fair value of equity or debt securities for a period.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 Available-for-Sale Investments, at Cost Available-for-Sale Investments, at Fair Value Common Stock Retained Earnings Valuation Allowance for Available-for-Sale Investments	$
Unrealized Gain (Loss) on Available-for-Sale Investments Available-for-Sale Investments, at Cost Available-for-Sale Investments, at Fair Value Common Stock Unrealized Gain (Loss) on Available-for-Sale Investments Valuation Allowance for Available-for-Sale Investments