Question

Missing Statement Items, Available-for-Sale Securities

Highland Industries Inc. makes investments in available-for-sale securities. Selected income statement items for the years ended December 31, Year 2 and Year 3, plus selected items from comparative balance sheets, are as follows:

There were no dividends.

Determine the missing items. If required, use the minus sign to indicate a net or operating loss, unrealized losses, or a credit balance in the valuation allowance account.

Highland Industries Inc.
Selected Income Statement Items
For the Years Ended December 31, Year 2 and Year 3
	Year 2	Year 3
Operating Income (Loss)	$	$
Gain (Loss) from Sale of Investments	3,740	(7,480)
Net Income (Loss)	$	$(10,290)

Highland Industries Inc.
Selected Balance Sheet Items
December 31, Year 1, Year 2, and Year 3
	Dec. 31, Year 1	Dec. 31, Year 2	Dec. 31, Year 3
Assets
Available-for-Sale Investments, at Cost	$72,930	$63,580	$88,830
Valuation Allowance for Available-for-Sale Investments	4,680	(5,610)
Available-for-Sale Investments, at Fair Value
Stockholders' Equity
Unrealized Gain (Loss) on Available-for-Sale Investments			(6,550)
Retained Earnings	$153,340	$216,920	$

Answer 1

Highland Industries Inc.
Selected Income Statement Items
For the Years Ended December 31, Year 2 and Year 3
				Year 2	Year 3
Operating income (loss)				59840	-2810
				(Note:2)	(Note:7)
Gain (Loss) from Sale of Investments				3740	-7480
Net Income (Loss)				63580	-10290
				(Note:1)
Highland Industries Inc.
Selected Balance Sheet Items
December 31, Year 1, Year 2, and Year 3
						Dec 31, Year 1	Dec 31, Year 2	Dec 31, Year 3
Assets:
Available-for-Sale Investments, at Cost						$72,930	$63,580	$88,830
Valuation Allowance for Available-for-Sale Investments						4,680	-5,610	-6,550
								(Note:8)
Available-for-Sale Investments, at Fair Value						77610	$57,970	82280
						(Note:3)	(Note:5)	(Note:9)
Stockholders' Equity:
Unrealized Gain (Loss) on Available-for-Sale Investments						4680	-5,610	-6,550
						(Note:4)	(Note:6)
Retained Earnings						$153,340	$216,920	206630
								(Note:10)
Note:1
Net income for year 2=Retained earnings as on year 2-Retained earnings as on year 1=216920-153340=$ 63580
Note:2
Operating income (loss) for year 2=Net income (loss)-Gain (Loss) from Sale of Investments=63580-3740=$ 59840
Note:3
Available-for-Sale Investments, at Fair Value at Dec 31,Year 1=Available-for-Sale Investments, at Cost+Valuation Allowance for Available-for-Sale Investments=72930+4680=$ 77610
Note:4
Unrealized Gain (Loss) on Available-for-Sale Investments at Dec 31,Year 1=Valuation Allowance for Available-for-Sale Investments at Dec 31,Year 1=$ 4680
Note:5
Available-for-Sale Investments, at Fair Value at Dec 31,Year 2=Available-for-Sale Investments, at Cost+Valuation Allowance for Available-for-Sale Investments=63580+-5610=$ 57970
Note:6
Unrealized Gain (Loss) on Available-for-Sale Investments at Dec 31,Year 2=Valuation Allowance for Available-for-Sale Investments at Dec 31,Year 2=$ -5610
Note:7
Operating income (loss) for year 3=Net income (loss)-Gain (Loss) from Sale of Investments=-10290--7480=-2810
Note:8
Unrealized Gain (Loss) on Available-for-Sale Investments at Dec 31,Year 3=Valuation Allowance for Available-for-Sale Investments at Dec 31,Year 3=$ -6550
Note:9
Available-for-Sale Investments, at Fair Value at Dec 31,Year 3=Available-for-Sale Investments, at Cost+Valuation Allowance for Available-for-Sale Investments=88830+-6550=$ 82280
Note:10
Retained earnings at Dec 31,Year 3=Net income (loss)+Retained earnings at Dec 31,Year 3=-10290+216920=$ 206630