Question

Balance Sheet Presentation of Available-for-Sale Investments During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows:

Security Shares Purchased Cost
Hawking Inc. 900 $44,000
Pavlov Co. 1,780 38,000
Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $50 per share and the Pavlov Co. stock had a market value of $24 per share. Galileo Company had net income of $300,000 and paid no dividends for the year ended December 31, Year 1. All of the available-for-sale investments are classified as current assets.
Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.

Answer 1

Answer:Please see below

Step-by-step explanation:

Security Shares Purchased Cost

Hawking Inc. 900 $44,000

Pavlov Co. 1,780 $ 38,000

total $82,000

In December 31st, the Hawking Inc. stock with market value of $50 per share and the Pavlov Co. stock had a market value of $24

Stock Number of shares market value per share value

Hawking Inc. $50 900 $45,000

Pavlov Co. $24 1780 $42,720

Total value $87,720

Unrealized gain/loss = $87,720 - $82,000 = $5,720

Galileo Company Balance sheet

Current assets

Available for sale investments at cost $82,000

Allowance available for sale investments $5,720

Available for sale at fair value $87,720