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During Year 2, Copernicus Corporation held a portfolio of available-for-sale securities having a cost of $185,000. There were no purchases or sales of investments during the year. The market values at the beginning and end of the year were $225,000 and $160,000, respectively. The net income for Year 2 was $180,000, and no dividends were paid during the year. The Stockholders’ Equity section of the balance sheet was as follows on December 31, Year 1: Prepare the Stockholders’ Equity section of the balance sheet for December 31, Year 2.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 15, Problem 24E
Textbook Problem
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During Year 2, Copernicus Corporation held a portfolio of available-for-sale securities having a cost of $185,000. There were no purchases or sales of investments during the year. The market values at the beginning and end of the year were $225,000 and $160,000, respectively. The net income for Year 2 was $180,000, and no dividends were paid during the year. The Stockholders’ Equity section of the balance sheet was as follows on December 31, Year 1:

Chapter 15, Problem 24E, During Year 2, Copernicus Corporation held a portfolio of available-for-sale securities having a

Prepare the Stockholders’ Equity section of the balance sheet for December 31, Year 2.

To determine

Prepare the stockholders’ equity section of the balance sheet.

Explanation of Solution

Stockholders’ equity: The claims of shareholders’ or the owners on a company’s resources after the liabilities are paid off is referred to as stockholders’ equity. Stockholders’ equity includes common stock and retained earnings.

Stockholders’ equity section:

Corporation C
Statement of Stockholders’ Equity (Partial)
December 31, Year 2
Common stock$50,000
Excess of issue price over par250,000
Retained earnings520,000
Unrealized gain (loss) on available-for-sale investments(25,000)
Total stockholders’ equity$795,000

Table (1)

Working Notes:

Compute retained earnings, Year 2...

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Chapter 15 Solutions

Financial Accounting
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