Question

On January 1, 2017, Acker Inc. had the following balance sheet.

ACKER INC. BALANCE SHEET AS OF JANUARY 1, 2017
Assets				Equity
Cash		$ 50,000		Common stock		$ 260,000
Debt 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 debt securities. The fair value of Acker Inc.’s available-for-sale debt securities at December 31, 2017, was $ 190,000; its cost was $ 140,000. No securities were purchased during the year. Acker Inc.’s income statement for 2017 was as follows. (Ignore income taxes.)

ACKER INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Dividend revenue		$ 5,000
Gain on sale of investments		30,000
Net income		$ 35,000

Prepare the journal entry to record the sale of the available-for-sale debt securities in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Prepare the journal entry to record the Unrealized Holding Gain or Loss for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Prepare a statement of comprehensive income for 2017.

ACKER INC. Statement of Comprehensive Income For the Year Ended December 31, 2017

			$

$

Prepare a balance sheet as of December 31, 2017.

ACKER INC. Balance Sheet (Partial)

Assets

			$

			$
Liabilities and Stockholders' Equity

			$

$

Answer 1

A.    CASH A/C $100,000

TO DEBT INVESTMENT ($210000-$140000) $70,000

TO GAIN ON SALE OF INVESTMENT $30,000  

B. DEBT INVESTMENT (AVAILABLE FOR SALE SECURITIES) $50,000

TO UNREALIZED INCREASE (DECREASE) IN VALUE $50,000

C.    ACKER INC.

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31,2017

PARTICULARS AMOUNT($)

NET INCOME 35,000

OTHER COMPREHENSIVE INCOME ($50000-30000) 20,000

COMPREHENSIVE INCOME 55,000

Accumulated other Comprehensive Income (31/12/2017) 50,000

LESS:Accumulated other Comprehensive Income (1/1/17) 30,000

Incremental in Unrealized Holding Gain 20,000

ADD: Realized Holding Gain 30,000

TOTAL 50,000

D.    ACKER INC.

BALANCE SHEET AS AT DECEMBER 31,2017

ASSETS AMOUNT ($) LIABILITIES AMOUNT($)

Cash (W.N.)    1,55000 STOCKHOLDER'S EQUITY

Debt Investment 1,90000 Common Stock 2,60000

(Available for sale securities) Retained Earnings 35,000

Accumulated other than Comprehensive 50,000

Income

TOTAL ASSETS 3,45000 TOTAL EQUITY 3,45000

WORKING NOTE:

OPENING CASH BALANCE $50000

ADD: DIVIDEND REVENUE $5000

ADD: CASH PROCEEDS ON SALE $100000

CLOSING CASH BALANCE   $155,000