Question

Required information (The following information applies to the questions displayed below.) Stoll Co.'s long-term available-for-sale portfolio at the start of this year consists of the following. Available-for-Sale Securities Company A bonds Company B notes Company C bonds Cost $534,300 159,490 661,900 Fair Value $490, eee 148,000 644,280 Stoll enters into the following transactions involving its available-for-sale debt securities this year. Jan. 29 Sold one-half of the Company B notes for $78,5ee. July 6 Purchased bonds of Company X for $120,600. Nov. 13 Purchased notes of Company 2 for $267,eee. Dec. 9 Sold all of the bonds of Company A for $519,000. The fair values at December 31 are B. $83,900; C. $608,900; X $100,000, and Z. $275,000. 3. What amount of gains or losses on transactions relating to long-term investments in available for sale debt securities does Stoll report on its income statement for this year?

Answer 1

Solution:

The answer is $ (16,545)

Loss of $ 16,545 will be reported in the income statement for this year.

Explanation:

1) Only realized gains and losses are reported under income statement. The given transaction, there are two sale transactions are occurred. There are as follows:

Date	Long tern available for sale portfolio	Cost Price	Selling Price	Realized gain / (loss)
Jan. 29	Company B Notes( $159,490 / 2)	$            79,745	$               78,500	$                               (1,245)
Dec. 9	Company A Bonds	$          534,300	$             519,000	$                             (15,300)
Total		$          614,045	$             597,500	$                             (16,545)

2) Fair Values are not considered in calculation of realized gain or losses.