Homework Answers
Answer :
(a) and (b) Journal entry to record the sale of the available for sale debt securities and unrealized holding gain in 2020 is as follows
| Date | Particulars | L.F | Amount ($) | Amount ($) |
| 31.12.2020 | Cash (70,000 + 30,000) | 100,000 | ||
| Gain on sale of securities | 30,000 | |||
| Available for sale of securities | 70,000 | |||
| (Being securities sold) |
| Date | Particulars | L.F | Amount ($) | Amount ($) |
| 31.12.2020 | Accumulated other comprehensive income | 50,000 | ||
| Accumulated other comprehensive income | 30,000 | |||
| Unrealized holding gain | 20,000 | |||
| (Being unrealized holding gain recognized) |
Working Note :
| January 1.2020 | |
| Fair value | 240,000 |
| Less : Accumulated other comprehensive | 30,000 |
| Cost basis | 210,000 |
| December 31.2020 | |
| Fair value | 190,000 |
| Less : Cost basis | 140,000 |
| Accumulated other comprehensive income | 50,000 |
(c) Statement of comprehensive income for 2020
|
Acker Inc Statement of comprehensive income For the year ended December 2020 |
|
| Net income | 35,000 |
| Other comprehensive income | |
| Total holding gain for 2020 | 50,000 |
| Less : Reclassification adjustment | 30,000 |
| Comprehensive income | 55,000 |
(d). Balance sheet as for December 31.2020
|
Acker Inc Balance sheet December 31.2020 |
|||
| Assets | Stockholders Equity | ||
| Cash (50,000 + 5,000 + 100,000) | 155,000 | Common stock | 260,000 |
| Available for sale securities | 190,000 | Retained earnings | 35,000 |
| Accumulated other comprehensive income | 50,000 | ||
| Total assets | 345,000 | Total Equity | 345,000 |
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Problem 17-9
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Problem 17-9
On January 1, 2017, Shamrock Inc. had the following balance
sheet.
SHAMROCK INC.
BALANCE SHEET
AS OF JANUARY 1, 2017
Assets
Equity
Cash
$51,800
Common stock
$249,100
Debt investments (available-for-sale)
247,100
Accumulated other comprehensive income
49,800
Total
$298,900
Total
$298,900
The accumulated other comprehensive income related to unrealized
holding gains on available-for-sale debt securities. The fair value
of Shamrock Inc.’s available-for-sale debt securities at December
31, 2017, was $212,800; its cost was $151,800. No securities were
purchased during...
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schedule of investments in available-for-sale debt securities (all
of which were acquired at par value):
Company
Amortized Cost
12/31/18 Fair Value
Cumulative Change in Fair Value
Morgan Company
$35,000
$34,200
$(800)
Nance Company
60,000
63,200
3,200
Totals
$95,000
$97,400
$2,400
During 2019, the following transactions occurred:
July 1
Purchased Oscar Company debt securities with a par value of
100,000 for $97,000. The securities carry an annual interest rate
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