Vanessa Corp. has common stock of $15,500,000, retained earnings of $12,000,000, unrealized gains on trading securities...

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Vanessa Corp. has common stock of $15,500,000, retained earnings of $12,000,000, unrealized gains on trading securities of $1,100,000 and unrealized losses on available-for-sale securities of $1,200,000. What is the total amount of its stockholders' equity?

Vanessa Corp. has common stock of $15,500,000, 10) retained earnings of $12,000,000, unrealized gains on trading securities o

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Answer 1

Answer #1

Answer: a. $26,300,000

Total stockholders equity = Common stock + Retained earnings - Unrealized losses on available for sales securities

= $15,500,000 + $12,000,000 - $1,200,000

= $26,300,000

.

Note:

Unrealized gains on trading securities should be presented on the income statement.

Ending Retained earnings balance = Beginning balance + Net income - Dividends

So, ending retained earnings balance was already been adjusted with Unrealized gains (losses) on trading securities.

Unrealized losses on available for sales securities do not go to the income statement. It directly goes to the balance sheet. So, it should be deducted in order to arrive at the total stockholders' equity.

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Answer 2

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Vanessa Corp. has common stock of $15,500,000, retained earnings of $12,000,000, unrealized gains on trading securities...

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