Stock Investment Transactions, Equity Method and Available-for-Sale Securities

Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:

Year 1
Jan. 18.	Purchased 6,800 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission.
July 22.	A cash dividend of $0.40 per share was received on the Malmo stock.
Oct. 5.	Sold 2,000 shares of Malmo Inc. stock at $41 per share less a brokerage commission of $50.
Dec. 18.	Received a regular cash dividend of $0.40 per share on Malmo Inc. stock.
Dec. 31	Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $34 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.
Year 2
Jan. 25.	Purchased an influential interest in Helsi Co. for $740,000 by purchasing 70,000 shares directly from the estate of the founder of Helsi. There are 200,000 shares of Helsi Co. stock outstanding.
July 16.	Received a cash dividend of $0.50 per share on Malmo Inc. stock.
Dec. 16.	Received a cash dividend of $0.50 per share plus an extra dividend of $0.10 per share on Malmo Inc. stock.
Dec. 31	Received $22,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $90,000 in Year 2. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co.
Dec. 31	Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $39 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $34 to $39 per share.

Date Description Debit Credit Year 1 Jan. 18. Investments-Malmo Inc. 244,800 Cash 244,800 July 22. Cash 2,720 Dividend Revenue 2,720 Oct. 5. Cash 81,950 Gain on Sale of Investments 9,950 Investments-Malmo Inc. 72,000 Dec. 18. Cash 1,920 Dividend Revenue 1,920 Dec. 31 Unrealized Gain (Loss) on Available-for-Sale Investments Valuation Allowance for Available-for-Sale Investments Year 2 Jan. 25. Investment in Helsi Co. Stock 18,919 X Cash July 16. Cash 38,000 x Dividend Revenue Dec. 16. Cash Dividend Revenue Dec. 31- Dividends Cash Investment in Helsi Co. Stock Dec. 31- Investment in Helsi Co. Stock Income Income of Helsi Co. V Valuation Unrealized Gain (Loss) on Available-for-Sale Investments 2. Prepare the investment-related asset and stockholders' equity balance sheet presentation for Glacier Products Inc. on Dece balance on December 31, Year 2, is $540,000. Glacier Products, Inc. Balance Sheet (selected items) December 31, Year 2 Current Assets: Available-for-Sale Investments (at Cost) Plus Valuation Allowance for Available-for-Sale Investments Available-for-Sale Investments (at Fair Value) Investments: Investment in Helsi Co. Stock Stockholders' Equity: Retained Earnings Unrealized Gain (Loss) on Available-for-Sale Investments