Prepare the stockholders equity section of the balance sheet

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Problem - Balance sheet presentation of available-for-sale investments

During 2012, its first year of operations, Newton Company purchased two available-for-sale investments as follows:

Security

Shares Purchased

Cost

Starlight Products, Inc.

700

$31,000

Reynolds Co.

1,900

41,000

Assume that as of December 31, 2012, the Starlight Products, Inc., stock had a market value of $55 per share and the Reynolds Co. stock had a market value of $18 per share. Newton Company had net income of $250,000, and paid no dividends for the year ending December 31, 2012.

Required -

a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.

b. Prepare the Stockholders' Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.

Reference no: EM132683722

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