Concept explainers
Investment reporting
O'Brien Industries Inc. is a hook publisher. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 follow. Selected missing balances are shown by letters.
ÓBrien 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 | $ a | $103,770 |
Less valuation allowance for available-for-sale investments | b. | 2,500 |
Available for-sale investments (fair value) | $ c | $101,270 |
Interest receivable | $ d | — |
Investment in Jolly Roger Co. stock—Note 2 | e. | $ 77,000 |
Office equipment (net) | 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 | 225,000 | 225,000 |
g | 308,770 | |
Unrealized gain (loss) on available for-sale investments | h. | (2,500) |
Total liabilities and Stockholders’ equity | $ 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:
No. of Shares | Cost per Share | Total Cost | Total Fair Value | |
Bernard Co. stock | 2,250 | $17 | $ 38,250 | $ 37,500 |
Chadwick Co. stock | 1,260 | 52 | 65,520 | 63,770 |
$103,770 | $101,270 |
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: |
Available-for-Sale Investments |
Fair Value |
Bernard Co. stock | $15,40 per share |
Chadwick Co. stock | $46,00 per share |
Gozar Inc. stock | $32,00 per share |
Nightline Co. bonds | $98 per $ 100 of face amount |
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.
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