Accounting for available-for-sale investments

Reference no: EM131819549

Question: Accounting for available-for-sale investments On July 1, 2016, Bella's Restaurant decides to invest excess cash of $51,200 from the tourist season by purchasing 3,200 shares of Wolf, Inc. stock at $16 per share. At yearend, December 31, 2016, Wolfs market price was $15 per share. The investment is categorized as an available-for-sale investment and will be held for the short-term.

Requirements: 1. Journalize the transactions for Bella's investment in Wolf, Inc. for 2016.

2. In what category and at what value would Bella report the asset on the December 31, 2016, balance sheet? In what account would the market price change in Wolf's stock be reported, if at all?

3. What was the net effect of the investment on Bella's net income for the year ended December 31, 2016?

Reference no: EM131819549

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