(Gain on Sale of Investments and Comprehensive Income) On January 1, 2012, Acker Inc. had the following balance sheet.
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ACKER INC. |
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Assets |
Equity |
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|
Cash |
$ 50,000 |
Common stock |
$260,000 |
|
Equity investments (available for sale) |
240,000 |
Accumulated other comprehensive income |
30,000 |
|
Total |
$290,000 |
Total |
$290,000 |
The accumulated other comprehensive income related to unrealized holding gains on available for sale securities. The fair value of Acker Inc.’s available for sale securities at December 31, 2012, was $190,000; its cost was $140,000. No securities were purchased during the year. Acker Inc.’s income statement for 2012 was as follows. (Ignore income taxes.)
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ACKER INC. |
|
|
Dividend revenue |
$ 5,000 |
|
Gain on sale of investments |
30,000 |
|
Net income |
$35,000 |
Instructions
(Assume all transactions during the year were for cash.)
(a) Prepare the journal entry to record the sale of the available for sale securities in 2012.
(b) Prepare a statement of comprehensive income for 2012.
(c) Prepare a balance sheet as of December 31, 2012.