Investment Reporting O'Brien Industries Inc. is a book publisher. Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: Cost per Share Bernard Co. stock Chadwick Co. stock Year 2 May 5. Oct. 1. Oct. 9. Dec. 31. Dec. 31. Dec. 31. 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: Available-for-Sale Investments Bernard Co. stock No. of Shares Chadwick Co. stock Dec. 31. Gozar Inc. stock 1,600 Nightline Co. bonds Required: 900 Purchased 1,900 shares of Gozar Inc. at $26 per share including brokerage commission. Gozar Inc. is classified as an available-for- sale security. Purchased $33,000 of Nightline Co. 5%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. Dividends of $9,000 are received on the Jolly Roger Co. investment. Jolly Roger Co. reported a total net income of $79,000 for Year 2. O'Brien Industries Inc. recorded equity earnings for its share of Jolly Roger Co. net income. Accrued three months of interest on the Nightline bonds. Adjusted the available-for-sale investment portfolio to fair value using the following fair value per-share amounts: Fair Value $14 35 Interest Receivable Investment in Jolly Roger Co. Stock - Note 2 Office Equipment (Net) $13 per share $30 per share $27 per share 98 per $100 of face amount Cash Accounts Receivable (Net) Available-for-Sale Investments (at Cost) - Note 1 Less Valuation Allowance for Available-for-Sale Investments Available-for-Sale Investments (Fair Value) Total Assets Accounts Payable Common Stock Excess of Issue Price Over Par Retained Earnings Unrealized Gain (Loss) on Available-for-Sale Investments Total Liabilities and Stockholders' Equity Total Cost Closed the O'Brien Industries Inc. net income of $114,800 for Year 2. O'Brien Industries Inc. paid no dividends during the year. $22,400 31,500 $53,900 $ The comparative unclassified balance sheets for December 31, Year 2 and Year 1 are provided below. Determine the missing amounts in the unclassified balance sheet. Do not round interim calculations. Round final answers to nearest dollar. Use minus sign to indicate the negative amounts. O'Brien Industries Inc. Balance Sheet December 31, Year 2 and Year 1 $ Dec. 31, Year 2 Dec. 31, Year 1 $171,287 106,400 $151,500 98,500 53,900 4,000 $49,900 Total Fair Value 89,300 $20,400 29,500 $49,900 $ 57,200 49,200 156,700 $ 53,700 94,000 $447,600 $ 51,500 49,200 156,700 194,200 (4,000) $447,600

Investment Reporting O'Brien Industries Inc. is a book publisher. Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: Cost per Share Bernard Co. stock Chadwick Co. stock Year 2 May 5. Oct. 1. Oct. 9. Dec. 31. Dec. 31. Dec. 31. 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: Available-for-Sale Investments Bernard Co. stock No. of Shares Chadwick Co. stock Dec. 31. Gozar Inc. stock 1,600 Nightline Co. bonds Required: 900 Purchased 1,900 shares of Gozar Inc. at $26 per share including brokerage commission. Gozar Inc. is classified as an available-for- sale security. Purchased $33,000 of Nightline Co. 5%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. Dividends of $9,000 are received on the Jolly Roger Co. investment. Jolly Roger Co. reported a total net income of $79,000 for Year 2. O'Brien Industries Inc. recorded equity earnings for its share of Jolly Roger Co. net income. Accrued three months of interest on the Nightline bonds. Adjusted the available-for-sale investment portfolio to fair value using the following fair value per-share amounts: Fair Value $14 35 Interest Receivable Investment in Jolly Roger Co. Stock - Note 2 Office Equipment (Net) $13 per share $30 per share $27 per share 98 per $100 of face amount Cash Accounts Receivable (Net) Available-for-Sale Investments (at Cost) - Note 1 Less Valuation Allowance for Available-for-Sale Investments Available-for-Sale Investments (Fair Value) Total Assets Accounts Payable Common Stock Excess of Issue Price Over Par Retained Earnings Unrealized Gain (Loss) on Available-for-Sale Investments Total Liabilities and Stockholders' Equity Total Cost Closed the O'Brien Industries Inc. net income of $114,800 for Year 2. O'Brien Industries Inc. paid no dividends during the year. $22,400 31,500 $53,900 $ The comparative unclassified balance sheets for December 31, Year 2 and Year 1 are provided below. Determine the missing amounts in the unclassified balance sheet. Do not round interim calculations. Round final answers to nearest dollar. Use minus sign to indicate the negative amounts. O'Brien Industries Inc. Balance Sheet December 31, Year 2 and Year 1 $ Dec. 31, Year 2 Dec. 31, Year 1 $171,287 106,400 $151,500 98,500 53,900 4,000 $49,900 Total Fair Value 89,300 $20,400 29,500 $49,900 $ 57,200 49,200 156,700 $ 53,700 94,000 $447,600 $ 51,500 49,200 156,700 194,200 (4,000) $447,600

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 2PB

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