Question

During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows: Security Shares Purchased Cost Hawking Inc. 590 $20,709 Pavlov Co. 1,600 29,280 Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $42 per share and the Pavlov Co. stock had a market value of $33 per share. Galileo Company had net income of $160,500 and paid no dividends for the year ending December 31, Year 1. All of the available-for-sale investments are classified as current assets. a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.

Answer 1

Answer: Please see below for answer

Step-by-step explanation:

Security Shares Purchased Cost

Hawking Inc. 590 $20,709

Pavlov Co. 1,600 $ 29,280

total $49,989

In December 31st, the Hawking Inc. stock with market value of $42 per share and the Pavlov Co. stock had a market value of $33

Stock Number of shares market value per share value

Hawking Inc. $42 590 $24,780

Pavlov Co. $33 1600 $52,800

Total value $77,580

Unrealized gain/loss = $77,580- $49,989= $27,591

Galileo Company Balance sheet

Current assets

Available for sale investments at cost $49,989

Allowance available for sale investments $27,591

Available for sale at fair value $77,580