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In: Accounting

At the beginning of 2016, Copper Company had the shareholders’ equity as shown below: Common stock...

At the beginning of 2016, Copper Company had the shareholders’ equity as shown below:

Common stock $5 par            $35,000

Additional Paid in Capital      $49,000

Retained Earnings                  $63,000

During 2017, the following events and transactions occurred.

Copper had sales revenue of $108,000. It incurred Cost of Goods Sold of $62,000 and Operating Expenses of $12,000.

Copper issued 1,000 shares of its $5 par common stock for $14 per share.

Copper invested $30,000 in Available-for-Sale securities. At the end of the year, the securities had a fair value of $35,000.

Copper paid dividends of $6,000.

The company’s tax rate was 35%.

Required: a) Prepare an income statement which includes net income and comprehensive income (in other words, the comprehensive income statement), but you can ignore earnings per share.

Solutions

Expert Solution

Available for sale securities are the investment which are not expected be held till maturity nor be sold in near future. They are reported at fair value on the balance sheet. Any unrealised gain or losses on account of change in the fair value is reported in Other Comprehensive Income. They are not passed through income statement. Once the investment is sold, the unrealized gain or loss is transferred to income statement.

ekkarill92 answered 2 years ago
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