Question

Investment Reporting

Teasdale Inc. manufactures and sells commercial and residential security equipment.

The following selected investment transactions occurred during 2017:

Mar.18.		Purchased 800 shares of Richter Inc. at $40 including brokerage commission. Richter is classified as an available-for-sale security.
July.12.		Dividends of $12,000 are received on the Wright Co. investment.
Oct. 1.		Purchased $24,000 of Toon Co. 4%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1.
Dec.31.		Wright Co. reported a total net income of $80,000 for 2017. Teasdale recorded equity earnings for its share of Wright Co. net income.
31.		Accrued interest for three months on the Toon Co. bonds purchased on October 1.
31.		Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts:
		Available-for-Sale Investments Fair Value Alvarez Inc. stock $41.50 per share Hirsch Inc. stock $26.00 per share Richter Inc. stock $48.00 per share Toon Co. bonds 101 per $100 of face amount
31.		Closed the Teasdale Inc. net income of $51,240. Teasdale Inc. paid no dividends during the year.

Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, 2016, are as follows:

	No. of Shares		Cost per Share		Total Cost		Total Fair Value
Alvarez Inc. stock	960		$38.00		$36,480		$39,936
Hirsch Inc. stock	1,900		28.80		54,720		60,040
					$91,200		$99,976

Note 2. The Investment in Wright Co. stock is an equity method investment representing 30% of the outstanding shares of Wright Co.

Required:

The comparative unclassified balance sheets for December 31, 2017 and 2016 are provided below. Selected balances are missing. Determine the missing values. Enter all amounts as positive numbers. Do not round interim calculations. Round final answers to nearest dollar.

Teasdale Inc.
Balance Sheet
December 31, 2017 and 2016
	Dec. 31, 2017	Dec. 31, 2016
Cash	$160,000	$156,000
Accounts Receivable (Net)	115,000	108,000
Available-for-Sale Investments (at Cost)-Note 1		91,200
Plus Valuation Allowance for Available-for-Sale Investments		8,776
Available-for-Sale Investments (Fair Value)	$	$ 99,976
Interest Receivable	$
Investment in Wright Co. stock-Note 2		$69,200
Office Equipment (Net)	96,000	105,000
Total Assets	$	$538,176
Accounts Payable	$ 91,000	$ 72,000
Common Stock	80,000	80,000
Excess of Issue Price Over Par	250,000	250,000
Retained Earnings		127,400
Unrealized Gain (Loss) on Available-for-Sale Investments		8,776
Total Liabilities and Stockholders' Equity	$	$538,176

Answer 1

Relevant portion of Balance Sheet:
	Dec. 31, 2017
Available-for-sale investments (at Cost)	147200
Plus Valuation Allowance for Available-for-sale investments	4680
Available-for-sale investments (Fair value)	151880
Interest receivable	240
Investment in Wright Co. stock	81200
Total Assets	604320
Retained earnings	178640
Unrealized gain (loss) on available-for-sale investments	4680
Total liabilities and stockholders' equity	604320

Kindly fill in the above into the balance sheet provided.

Working:

1.

Fair Value Adjustment Computation - Available-for-Sale Investments
December 31, 2017 AFS Investments	# of shares	Cost	Fair Value	Unrealized Amount
Alvarez Inc. stock	960	36480	39840
Hirsch Inc. stock	1900	54720	49400
Richter Inc. stock	800	32000	38400
Toon Co. bonds		24000	24240
Total		147200	151880	4680	Gain
Required December 31, 2017 balance in Valuation Allowance for AFSI				4680	Debit
December 31, 2016 balance in Valuation Allowance for AFSI				8776	Debit
December 31, 2017 required adjustment to Valuation Allowance for AFSI				4096	Credit

2.

Investment in Wright Co. stock
December 31, 2016 balance	69200
Less: Dividends received	12000
	57200
Add: Share in net income (30% x $80000)	24000
December 31, 2017 balance	81200

3. Interest receivable = $24000 x 4% x 3/12 = $240

4. Retained earnings = $127400 + $51240 = $178640