O'Brien Industries Inc.Balance SheetDecember 31, Year 2 and Year 1Dec. 31, Year 2Dec. 31, Year 1Cash$233,000$220,000Accounts receivable (net)136,530138,000Available-for-sale investments (at cost)-Note 12$$103,770a.Less valuation allowance for available-for-sale investmentsb.2,500Available-for-sale investments (fair value)$101,270C.Interest receivable2$d.$ 77,000Investment in Jolly Roger Co. stock-Note 2Office equipment (net)e.115,000130,000Total assetsf.$666,270Accounts payable$ 69,400$ 65,000Common stock70,00070,000Excess of issue price over parRetained earnings225,000225,000308,770g.Unrealized gain (loss) on available-for-sale investmentsh.(2,500)Total liabilities and stockholders'equity2$i.$666,270Note 1. Investments are classified as available for sale. The investments at cost andfair value on December 31, Year 1, are as follows:Total CostNo. of SharesCost per ShareTotal Fair Value$ 38,250$ 37,500Bernard Co. stock2,250$17Chadwick Co. stock1,2605265,52063,770$103,770$101,270 Available-for-SaleInvestmentsFair ValueBernard Co. stock$15.40 per share$46.00 per shareChadwick Co. stock$32.00 per share$98 per $100 of face amountGozar Inc. stockNightline Co. bonds

Question
Asked Dec 20, 2019
4 views

O’Brien Industries Inc. is a book publisher. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 follow. Selected missing balances are shown by letters.

Please see  the attachment for details:

Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding shares of Jolly Roger Co.
The following selected investment transactions occurred during Year 2:
May 5. Purchased 3,080 shares of Gozar Inc. at $30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security.
Oct. 1. Purchased $40,000 of Nightline Co. 6%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1.
9. Dividends of $12,500 are received on the Jolly Roger Co. investment.
Dec. 31. Jolly Roger Co. reported a total net income of $112,000 for Year 2. O’Brien Industries Inc. recorded equity earnings for its share of Jolly Roger Co. net income.
31. Accrued three months of interest on the Nightline bonds.
31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts:

Please see  the attachment for details:

Dec. 31. Closed the O’Brien Industries Inc. net income of $146,230. O’Brien Industries Inc. paid no dividends during the year.

Instructions

Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.

O'Brien Industries Inc.
Balance Sheet
December 31, Year 2 and Year 1
Dec. 31, Year 2
Dec. 31, Year 1
Cash
$233,000
$220,000
Accounts receivable (net)
136,530
138,000
Available-for-sale investments (at cost)-Note 1
2$
$103,770
a.
Less valuation allowance for available-for-sale investments
b.
2,500
Available-for-sale investments (fair value)
$101,270
C.
Interest receivable
2$
d.
$ 77,000
Investment in Jolly Roger Co. stock-Note 2
Office equipment (net)
e.
115,000
130,000
Total assets
f.
$666,270
Accounts payable
$ 69,400
$ 65,000
Common stock
70,000
70,000
Excess of issue price over par
Retained earnings
225,000
225,000
308,770
g.
Unrealized gain (loss) on available-for-sale investments
h.
(2,500)
Total liabilities and stockholders'equity
2$
i.
$666,270
Note 1. Investments are classified as available for sale. The investments at cost and
fair value on December 31, Year 1, are as follows:
Total Cost
No. of Shares
Cost per Share
Total Fair Value
$ 38,250
$ 37,500
Bernard Co. stock
2,250
$17
Chadwick Co. stock
1,260
52
65,520
63,770
$103,770
$101,270
help_outline

Image Transcriptionclose

O'Brien Industries Inc. Balance Sheet December 31, Year 2 and Year 1 Dec. 31, Year 2 Dec. 31, Year 1 Cash $233,000 $220,000 Accounts receivable (net) 136,530 138,000 Available-for-sale investments (at cost)-Note 1 2$ $103,770 a. Less valuation allowance for available-for-sale investments b. 2,500 Available-for-sale investments (fair value) $101,270 C. Interest receivable 2$ d. $ 77,000 Investment in Jolly Roger Co. stock-Note 2 Office equipment (net) e. 115,000 130,000 Total assets f. $666,270 Accounts payable $ 69,400 $ 65,000 Common stock 70,000 70,000 Excess of issue price over par Retained earnings 225,000 225,000 308,770 g. Unrealized gain (loss) on available-for-sale investments h. (2,500) Total liabilities and stockholders'equity 2$ i. $666,270 Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: Total Cost No. of Shares Cost per Share Total Fair Value $ 38,250 $ 37,500 Bernard Co. stock 2,250 $17 Chadwick Co. stock 1,260 52 65,520 63,770 $103,770 $101,270

fullscreen
Available-for-Sale
Investments
Fair Value
Bernard Co. stock
$15.40 per share
$46.00 per share
Chadwick Co. stock
$32.00 per share
$98 per $100 of face amount
Gozar Inc. stock
Nightline Co. bonds
help_outline

Image Transcriptionclose

Available-for-Sale Investments Fair Value Bernard Co. stock $15.40 per share $46.00 per share Chadwick Co. stock $32.00 per share $98 per $100 of face amount Gozar Inc. stock Nightline Co. bonds

fullscreen
check_circle

Expert Answer

Step 1

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Step 2

To find: The missing amounts (a) to (i)

help_outline

Image Transcriptionclose

(a) Compute available-for-sale investment. (at cost), for Year 2. ఇా Number of Cost per Share (Or Bond Value) Cost of Security Shares (Or Face Amount) 2,250 shares x 1,260 shares 3,080 shares | x $40,000 x Investment Company C Stock Company B Stock Company G Stock Company N Bonds Total $17.00 = S38,250 65,520 92,400 40.000 $236,170 52.00= 30.00 100% (b) Compute valuation allowance for available-for-sale investment, for Year 2. Step 1: Compute available-for-sale investment, (fair value), for Year 2. Fair Value Number of Fair Value per Share (Or Bond Value) $15.40 Shares (Or Face Amount) Security of Investment Company C Stock Company B Stock |Company G Stock Company NBonds 2,250 shares x 1,260 shares x 3,080 shares x $40,000 S34,650 57,960 46.00 32.00 98,560 98% 39.200 Total $230,370

fullscreen
Step 3
help_outline

Image Transcriptionclose

Step 2: Compute valuation allowance for available-for-sale investment, for Year 2. Amount (S) $230,370 Details Available-for-sale investments at fair value, December 31, (From Table-2) Less: Available-for-sale investments at cost, December 31, (From Table-1) (236,170) Valuation allowance for available-for-sale investments S(5,800) (c) Compute available-for-sale investment. (fair value), for Year 2. Fair Value Number of Fair Value per Share (Or Bond Value) $15.40 of Security Shares (Or Face Amount) Investment Company C Stock Company B Stock Company G Stock Company N Bonds 2,250 shares 1,260 shares 3,080 shares $40,000 $34,650 46.00 57,960 32.00 98,560 98% 39.200 Total $230,370 || ||||

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Other

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: On April 1, 20Y1, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $18,000 cash ...

A: Requirement 1:Prepare the journal entry for L and C’s investment in the partnership.

question_answer

Q: Describe the three methods that managers can use to express CVP relationships?

A: CVP relationships means Cost volume profit relationship. It is a analysis used by management to unde...

question_answer

Q: Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of o...

A: Click to see the answer

question_answer

Q: Bocelli Co. purchased $120,000 of 6%, 20-year Sanz County bonds on May 11, Year 1, directly from the...

A: Bond investment: Bond investments are debt securities which pay a fixed interest revenue to the inve...

question_answer

Q: Musa Moshref and Shaniqua Hollins have operated a successful firm for many years, shar- ing net inco...

A: 1.The journal entries as of June 30 is as follows:

question_answer

Q: Question 4 in pinned below and it has 2 pictures

A: a.  Following is the bank reconciliation statement of G’s Company:

question_answer

Q: Give an example of how a manager can decrease variable costs while increasing fixed costs?

A: Variable Cost: Variable costs are costs which are directly vary with the change in production. Hence...

question_answer

Q: On January 1, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December...

A:  

question_answer

Q: Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance s...

A: