Question

1. Stock Investment Transactions, Equity Method and Available-for-Sale Securities

   Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:

   Year 1
   Jan. 18.	Purchased 7,900 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission.
   July 22.	A cash dividend of $0.45 per share was received on the Malmo stock.
   Oct. 5.	Sold 2,400 shares of Malmo Inc. stock at $39 per share less a brokerage commission of $50.
   Dec. 18.	Received a regular cash dividend of $0.45 per share on Malmo Inc. stock.
   Dec. 31	Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $33 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.
   Year 2
   Jan. 25.	Purchased an influential interest in Helsi Co. for $770,000 by purchasing 38,500 shares directly from the estate of the founder of Helsi. There are 110,000 shares of Helsi Co. stock outstanding.
   July 16.	Received a cash dividend of $0.55 per share on Malmo Inc. stock.
   Dec. 16.	Received a cash dividend of $0.55 per share plus an extra dividend of $0.15 per share on Malmo Inc. stock.
   Dec. 31	Received $23,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $95,000 in Year 2. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co.
   Dec. 31	Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $40 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $33 to $40 per share.

   Required:

   1. Journalize the entries to record the preceding transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places.

   Date	Description	Debit	Credit
   Year 1
   Jan. 18.
   July 22.
   Oct. 5.
   Dec. 18.
   Dec. 31
   Year 2
   Jan. 25.
   July 16.
   Dec. 16.
   Dec. 31-Dividends
   Dec. 31-Income
   Dec. 31-Valuation

   2. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Glacier Products Inc. on December 31, Year 2, assuming that the Retained Earnings balance on December 31, Year 2, is $562,000.

   Glacier Products, Inc. Balance Sheet (selected items) December 31, Year 2
   Current Assets:
   Investments:
   Stockholders' Equity:

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Answer 1