During 2001, Litten Company purchased trading securities as a short term investment. The costs of the securities and their market values on December 31, 2003, are listed below:
|
Market Value |
||
|
Security |
Cost |
(December 31, 2003) |
|
A |
$ 65,000 |
$ 81,000 |
|
B |
100,000 |
54,000 |
|
C |
220,000 |
226,000 |
Litten had no trading securities in the years before 2003. Before any adjustments related to these trading securities, Litten had net income of $300,000 in 2003.
1. What is net income (ignoring income taxes) after making any necessary trading security adjustments?
2. What would net income be if the market value of Security B were $95,000?