During the first year of operations, Makala Company purchased two trading investments as follows: Assume that as of December 31, the Oceanna Company stock had a market value of $49 per share and Rockledge, Inc. stock had a market value of $20 per share. Makala had 10,000 shares of no-par stock outstanding that was issued for $150,000. For the year ending December 31, Makala had net income of $105,000. No dividends were paid.
(a)Prepare the current assets section of the balance sheet presentation for the trading securities as of December 31.(b)Explain how the gain or loss would be reported on the income statement.

Question

During the first year of operations, Makala Company purchased two trading investments as follows:

Assume that as of December 31, the Oceanna Company stock had a market value of $49 per share and Rockledge, Inc. stock had a market value of $20 per share. Makala had 10,000 shares of no-par stock outstanding that was issued for $150,000. For the year ending December 31, Makala had net income of $105,000. No dividends were paid.
(a)Prepare the current assets section of the balance sheet presentation for the trading securities as of December 31.(b)Explain how the gain or loss would be reported on the income statement.

Urvashi Walia · Accepted Answer

Final Answer : (a)   (b) The gain would be reported as Other revenue on the income statement.​

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