Question

Balance Sheet Presentation of Available-for-Sale Investments
During Year 1,it's first year of operations,Galileo Company purchased two available -for -sale investments as follows :Security -Hawkins inc Shares Purchased-720 Cost-$30,672
Security-Pavlov Co, Shares Purchased-$1950,Cost-$43,290
   Assume that as of December 31,Year 1,the Hawking Inc,stock had a market value for $51 per share and the Pavlov Co. stock had a market value of $40 per share. Galileo Company had net income of $237,400, and paid no dividends for the year ending December 31,Year 1. All of the Available-for-Sale investments are classified as current assests.
A.Prepare the Current Assests section of the balance sheet presentation for the available -for-sale investments.
B.Prepare the Stockholders' Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the Available-for-Sale investments

Answer 1

a. Galio Company
Balance Sheet ( Partial ) as on 31 Dec
Asset
Current Asset
Available for Sale investment at cost	$73,962.00
Plus Valuation Allowance on Avaialable for Sale Inv.	$40,758.00
	$114,720.00

Working Note
Market Value of Stock
Hawking (720 Share X $51 )	$36,720.00
Pavlov Co. (1950 ShareX $40)	$78,000.00
Total (a)	$114,720.00
Less: Cost($30672+$43290) (b)	$73,962.00
Unrealized Gain(a-b)	$40,758.00

b. Galileo Company
Stockholders Equity ( Partial)
Retained Eaning	237400
Unrealized gain on Avaiable for Sale Inv.	$40,758.00
Total	$278,158.00