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Storm, Inc. purchased the following available-for-salesecurities during 2016, its first year of operations:

Name Number of Shares Cost
Dust Devil, Inc. 1,900 $81,700
Gale Co. 850 68,000
Whirlwind Co. 2,850 114,000
Total $263,700

The market price per share for the available-for-sale securityportfolio on December 31, 2016, was as follows:

Market Price per Share,
Dec. 31, 2016
Dust Devil, Inc. $40
Gale Co. 75
Whirlwind Co. 42

a. Provide the journal entry to adjust theavailable-for-sale security portfolio to fair value on December 31,2016.

2016 Dec. 31 Valuation Allowance forAvailable-for-Sale Investments

b. Is there any impact of December 31, 2016journal entry on the income statement?

, any unrealized gain/loss is reported of the

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Elin Hessel
Elin HesselLv2
28 Sep 2019

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Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, 2016. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:

Record these transactions on page 10:

2016
Jan. 18 Purchased 9,000 shares of Malmo Inc. as an available-for-sale investment at $40 per share, including the brokerage commission.
July 22 A cash dividend of $3.00 per share was received on the Malmo stock.
Oct. 5 Sold 500 shares of Malmo Inc. stock at $58.00 per share, less a brokerage commission of $100.
Dec. 18 Received a regular cash dividend of $3.00 per share on Malmo Inc. stock.
31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $36.00 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.

Record these transactions on page 11:

2017
Jan. 25 Purchased an influential interest in Helsi Co. for $800,000 by purchasing 75,000 shares directly from the estate of the founder of Helsi. There are 250,000 shares of Helsi Co. stock outstanding.
July 16 Received a cash dividend of $3.00 per share on Malmo Inc. stock.
Dec. 16 Received a cash dividend of $3.00 per share plus an extra dividend of $0.20 per share on Malmo Inc. stock.
31 Received $38,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $170,000 in 2017. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co.
31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $44 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $36 to $44 per share.
Required:
A. Journalize the entries to record the preceding transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries.
B. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Glacier Products Inc. on December 31, 2017, assuming the Retained Earnings balance on December 31, 2017, is $700,000. Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. For those boxes in which you must enter subtractive or negative numbers use a minus sign.
CHART OF ACCOUNTS
Glacier Products Inc.
General Ledger
ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
121 Allowance for Doubtful Accounts
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
161 Investments-Malmo Inc.
163 Investment in Helsi Co. Stock
165 Valuation Allowance for Trading Investments
166 Valuation Allowance for Available-for-Sale Investments
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
231 Interest Payable
241 Salaries Payable
251 Sales Tax Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Treasury Stock
332 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
350 Unrealized Gain (Loss) on Available-for-Sale Investments
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
611 Interest Revenue
612 Dividend Revenue
621 Income of Helsi Co.
631 Gain on Sale of Investments
641 Unrealized Gain on Trading Investments
EXPENSES
511 Cost of Merchandise Sold
512 Bad Debt Expense
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
561 Depreciation Expense-Store Equipment
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
721 Loss of Helsi Co.
731 Loss on Sale of Investments
741 Unrealized Loss on Trading Investments

Amount Descriptions
Available-for-sale investments (at cost)
Available-for-sale investments (at fair value)
Net income
Net loss
Other comprehensive income (loss)
Other income (loss)
Trading investments (at cost)
Trading investments (at fair value)

Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries.

PAGE 10PAGE 11

JOURNAL

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

11

Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Glacier Products Inc. on December 31, 2017, assuming the Retained Earnings balance on December 31, 2017, is $700,000. Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. For those boxes in which you must enter subtractive or negative numbers use a minus sign.

GLACIER PRODUCTS, INC.

Balance Sheet (selected items)

December 31, 2017

1

Current assets:

2

3

4

5

6

Investments:

7

8

9

Stockholders’ equity:

10

11
2. After all of the transactions for the year ended December 31,2016, had been posted [including the transactions recorded in part(1) and all adjusting entries], the data that follows were takenfrom the records of Equinox Products Inc.
A. Prepare a multiple-step income statement for the year endedDecember 31, 2016, concluding with earnings per share. In computingearnings per share, assume that the average number of common sharesoutstanding was 100,000 and preferred dividends were $100,000.(Round earnings per share to the nearest cent.)*
B. Prepare a retained earnings statement for the year endedDecember 31, 2016.*
C. Prepare a balance sheet in report form as of December 31, 2016.*
* Read the instructions above each financial statement carefully.They may contain specific instructions for completing thestatement.

Income Statement data:
Advertising expense $ 150,000
Cost of merchandise sold 3,700,000
Delivery expense 30,000
Depreciation expense-office buildings and equipment 30,000
Depreciation expense-store buildings and equipment 100,000
Dividend revenue 4,500
Gain on sale of investments 4,980
Income from Pinkberry Co. investment 76,800
Income tax expense 140,500
Interest expense 21,000
Interest revenue 2,720
Miscellaneous administrative expense 7,500
Miscellaneous selling expense 14,000
Office rent expense 50,000
Office salaries expense 170,000
Office supplies expense 10,000
Sales 5,254,000
Sales commissions 185,000
Sales salaries expense 385,000
Store supplies expense 21,000

Retained earnings and balance sheet data:
Accounts payable $ 194,300
Accounts receivable 545,000
Accumulated depreciation—office buildings and equipment 1,580,000
Accumulated depreciation—store buildings and equipment 4,126,000
Allowance for doubtful accounts 8,450
Available-for-sale investments (at cost) 260,130
Bonds payable, 5%, due 2024 500,000
Cash 246,000
Common stock, $20 par
(400,000 shares authorized; 100,000 shares issued, 94,600outstanding) 2,000,000
Dividends:
Cash dividends for common stock 155,120
Cash dividends for preferred stock 100,000
Goodwill 500,000
Income tax payable 44,000
Interest receivable 1,125
Investment in Pinkberry Co. stock (equity method) 1,009,300
Investment in Dream Inc. bonds (long term) 90,000
Merchandise inventory (December 31, 2016),
at lower of cost (FIFO) or market 778,000
Office buildings and equipment 4,320,000
Paid-in capital from sale of treasury stock 13,000
Excess of issue price over par:
-Common 886,800
-Preferred 150,000
Preferred 5% stock, $80 par
(30,000 shares authorized; 20,000 shares issued) 1,600,000
Premium on bonds payable 19,000
Prepaid expenses 27,400
Retained earnings, January 1, 2016 9,319,725
Store buildings and equipment 12,560,000
Treasury stock
(5,400 shares of common stock at cost of $33 per share) 178,200
Unrealized gain (loss) on available-for-sale investments (6,500)
Valuation allowance for available-for-sale investments (6,500)

Selected transactions completed by Equinox Products Inc. duringthe fiscal year ended December 31, 2016, were as follows:

Record on journal page 10:

Jan. 3 Issued 15,000 shares of $20 par common stock at $30, receivingcash.
Feb. 15 Issued 4,000 shares of $80 par preferred 5% stock at $100,receiving cash.
May 1 Issued $500,000 of 10-year, 5% bonds at 104, with interestpayable semiannually.
16 Declared a dividend of $0.50 per share on common stock and$1.00 per share on preferred stock. On the date of record, 100,000shares of common stock were outstanding, no treasury shares wereheld, and 20,000 shares of preferred stock were outstanding.Journalize this transaction as a single entry.
26 Paid the cash dividends declared on May 16.
Jun. 1 Purchased 7,500 shares of Solstice Corp. at $40 per share, plusa $150 brokerage commission. The investment is classified as anavailable-for-sale investment.
8 Purchased 8,000 shares of treasury common stock at $33 pershare.
22 Purchased 40,000 shares of Pinkberry Co. stock directly fromthe founders for $24 per share. Pinkberry has 125,000 shares issuedand outstanding. Equinox Products Inc. treated the investment as anequity method investment.
30 Declared a $1.00 cash dividend per share on preferred stock. Onthe date of record, 20,000 shares of preferred stock wereoutstanding.
Jul. 11 Paid the cash dividends declared on Jul. 11 to the preferredstockholders.
Aug. 27 Received $27,500 dividend from Pinkberry Co. investment of Jun.22.

Record on journal page 11:

Oct. 1 Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directlyfrom the issuing company, at their face amount plus accruedinterest of $375. The bonds are classified as a held-to-maturitylong-term investment.
7 Sold, at $38 per share, 2,600 shares of treasury common stockpurchased on Jun. 8.
14 Received a dividend of $0.60 per share from the Solstice Corp.investment on Jun. 1.
29 Sold 1,000 shares of Solstice Corp. at $45, includingcommission.
31 Recorded the payment of semiannual interest on the bonds issuedon May 1 and the amortization of the premium for six months. Theamortization is determined using the straight-line method.
Dec. 31 Accrued interest for three months on the Dream Inc. bondspurchased on Oct. 1.
31 Pinkberry Co. recorded total earnings of $240,000. EquinoxProducts recorded equity earnings for its share of Pinkberry Co.net income.
31 The fair value for Solstice Corp. stock was $39.02 per share onDecember 31, 2016. The investment is adjusted to fair value, usinga valuation allowance account. Assume Valuation Allowance forAvailable-for-Sale Investments had a beginning balance ofzero.
Required:
1. Journalize the selected transactions. Refer to the Chart ofAccounts for exact wording of account titles.
2. After all of the transactions for the year ended December 31,2016, had been posted [including the transactions recorded in part(1) and all adjusting entries], the data that follows were takenfrom the records of Equinox Products Inc.
A. Prepare a multiple-step income statement for the year endedDecember 31, 2016, concluding with earnings per share. In computingearnings per share, assume that the average number of common sharesoutstanding was 100,000 and preferred dividends were $100,000.(Round earnings per share to the nearest cent.)*
B. Prepare a retained earnings statement for the year endedDecember 31, 2016.*
C. Prepare a balance sheet in report form as of December 31, 2016.*
* Read the instructions above each financial statement carefully.They may contain specific instructions for completing thestatement.

Income Statement data:
Advertising expense $ 150,000
Cost of merchandise sold 3,700,000
Delivery expense 30,000
Depreciation expense-office buildings and equipment 30,000
Depreciation expense-store buildings and equipment 100,000
Dividend revenue 4,500
Gain on sale of investments 4,980
Income from Pinkberry Co. investment 76,800
Income tax expense 140,500
Interest expense 21,000
Interest revenue 2,720
Miscellaneous administrative expense 7,500
Miscellaneous selling expense 14,000
Office rent expense 50,000
Office salaries expense 170,000
Office supplies expense 10,000
Sales 5,254,000
Sales commissions 185,000
Sales salaries expense 385,000
Store supplies expense 21,000

Retained earnings and balance sheet data:
Accounts payable $ 194,300
Accounts receivable 545,000
Accumulated depreciation—office buildings and equipment 1,580,000
Accumulated depreciation—store buildings and equipment 4,126,000
Allowance for doubtful accounts 8,450
Available-for-sale investments (at cost) 260,130
Bonds payable, 5%, due 2024 500,000
Cash 246,000
Common stock, $20 par
(400,000 shares authorized; 100,000 shares issued, 94,600outstanding) 2,000,000
Dividends:
Cash dividends for common stock 155,120
Cash dividends for preferred stock 100,000
Goodwill 500,000
Income tax payable 44,000
Interest receivable 1,125
Investment in Pinkberry Co. stock (equity method) 1,009,300
Investment in Dream Inc. bonds (long term) 90,000
Merchandise inventory (December 31, 2016),
at lower of cost (FIFO) or market 778,000
Office buildings and equipment 4,320,000
Paid-in capital from sale of treasury stock 13,000
Excess of issue price over par:
-Common 886,800
-Preferred 150,000
Preferred 5% stock, $80 par
(30,000 shares authorized; 20,000 shares issued) 1,600,000
Premium on bonds payable 19,000
Prepaid expenses 27,400
Retained earnings, January 1, 2016 9,319,725
Store buildings and equipment 12,560,000
Treasury stock
(5,400 shares of common stock at cost of $33 per share) 178,200
Unrealized gain (loss) on available-for-sale investments (6,500)
Valuation allowance for available-for-sale investments (6,500)

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