On January 1, 2020, Acker Inc. had the following balance sheet. Acker Inc.Balance SheetAs of January 1, 2020 Assets Equity Cash $ 50,000 Common stock $260,000 Debt investments (available-for-sale) 240,000 Accumulated other comprehensive income 30,000 Total $290,000 Total $290,000 The accumulated other comprehensive income related to unrealized holding gains on available-for-sale debt securities. The fair value of Acker Inc.'s available-for-sale debt securities at December 31, 2020, was $190,000; its cost was $140,000. No securities were purchased during the year. Acker Inc.'s income statement for 2020 was as follows. (Ignore income taxes.) Acker Inc.Income StatementFor the Year Ended December 31, 2020 Dividend revenue $ 5,000 Gain on sale of investments 30,000 Net income $35,000 Instructions (Assume all transactions during the year were for cash.) a. Prepare the journal entry to record the sale of the available-for-sale debt securities in 2020. b. Prepare the journal entry to record the Unrealized Holding Gain or Loss for 2020. c. Prepare a statement of comprehensive income for 2020. d. Prepare a balance sheet as of December 31, 2020.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 11P: Net Income and Comprehensive Income At the beginning of 2019, JR Companys shareholders equity was as...

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Question

On January 1, 2020, Acker Inc. had the following balance sheet.

Acker Inc. Balance Sheet As of January 1, 2020
Assets		Equity
Cash	$ 50,000		Common stock	$260,000
Debt investments (available-for-sale)	240,000		Accumulated other comprehensive income	30,000
Total	$290,000		Total	$290,000

The accumulated other comprehensive income related to unrealized holding gains on available-for-sale debt securities. The fair value of Acker Inc.'s available-for-sale debt securities at December 31, 2020, was $190,000; its cost was $140,000. No securities were purchased during the year. Acker Inc.'s income statement for 2020 was as follows. (Ignore income taxes.)

Acker Inc. Income Statement For the Year Ended December 31, 2020
	Dividend revenue	$ 5,000
	Gain on sale of investments	30,000
	Net income	$35,000

Instructions

(Assume all transactions during the year were for cash.)

a. Prepare the journal entry to record the sale of the available-for-sale debt securities in 2020.

b. Prepare the journal entry to record the Unrealized Holding Gain or Loss for 2020.

c. Prepare a statement of comprehensive income for 2020.

d. Prepare a balance sheet as of December 31, 2020.

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