Stuart Corp. purchased 100 shares of Dumb Co. for $8 a share. It purchased 200 shares of Silly Inc. for $12 a share. As of December 31, Dumb Co. is selling for $9 a share and Silly Inc. is selling for $13 a share. Dumb Co. will be held at least 3 years and is classified as available-for-sale and Silly is classified as trading. Stuart had net income of $10,000 before reporting the impact of investment transactions.
Required:
a.Record the December 31 adjusting entries for investments.
b.What is Stuart Corp.'s net income after adjusting for investments?
c.What is the appropriate balance sheet classification for each investment?

Question

Stuart Corp. purchased 100 shares of Dumb Co. for $8 a share. It purchased 200 shares of Silly Inc. for $12 a share. As of December 31, Dumb Co. is selling for $9 a share and Silly Inc. is selling for $13 a share. Dumb Co. will be held at least 3 years and is classified as available-for-sale and Silly is classified as trading. Stuart had net income of $10,000 before reporting the impact of investment transactions.
Required: 
a.Record the December 31 adjusting entries for investments.
b.What is Stuart Corp.'s net income after adjusting for investments?
c.What is the appropriate balance sheet classification for each investment?

Quizplus · Accepted Answer

The Answer of Stuart Corp. purchased 100 shares of Dumb Co. for $8 a share. It purchased 200 shares of Silly Inc. for $12 a share. As of December 31, Dumb Co. is selling for $9 a share and Silly Inc. is selling for $13 a share. Dumb Co. will be held at least 3 years and is classified as available-for-sale and Silly is classified as trading. Stuart had net income of $10,000 before reporting the impact of investment transactions.
Required: 
a.Record the December 31 adjusting entries for investments.
b.What is Stuart Corp.'s net income after adjusting for investments?
c.What is the appropriate balance sheet classification for each investment?