Eleston Printing acquired the following short-term equity securities on January 1,2X12: $\begin{array}{lcccc}
\text { Company. } & \text { \# of Shares } & \text { Price/share } & & \text { Total Cost } \
\text { Color, Inc. }& 250 & \$ 22 & & \$ 5,500 \
\text { Black, Inc. } & 300 & 22 & & 6,600 \
\text { White, Inc. } & 500 & 14 & & \underline{7,000} \
& & & & \$ 19,100
\end{array}$ The quarter-end prices per share were as follows:
$\begin{array}{lcc}
\text { Company } & 03 / 31 / 2X12 & 06 / 30 / 2X12 & 09 / 31 / 2X12 & 12 / 30 / 2X12\
\text { Color, Inc. } & \$ 23 & \$ 21&\$22&\$21 \
\text { Black, Inc. } & 24 & 20 &23&24\
\text { White. Inc. } & 15 & 14&13&13
\end{array}$ Eleston Printing considers Color,Inc.stock to be a trading security and Black,Inc.and White,Inc.to be available-for-sale securities.
What will be the net gain or loss reported on the income statement of Eleston Printing for the 3 month period ending December 31,2X12?

Question

Eleston Printing acquired the following short-term equity securities on January 1,2X12: $\begin{array}{lcccc}
\text { Company. } & \text { \# of Shares } & \text { Price/share } & & \text { Total Cost } \
\text { Color, Inc. }& 250 & \$ 22 & & \$ 5,500 \
\text { Black, Inc. }  & 300 & 22 & & 6,600 \
\text { White, Inc. } & 500 & 14 & & \underline{7,000} \
& & & & \$ 19,100
\end{array}$ The quarter-end prices per share were as follows:
$\begin{array}{lcc}
\text { Company } & 03 / 31 / 2X12 & 06 / 30 / 2X12 & 09 / 31 / 2X12 & 12 / 30 / 2X12\
\text { Color, Inc. } & \$ 23 & \$ 21&\$22&\$21 \
\text { Black, Inc. } & 24 & 20 &23&24\
\text { White. Inc. } & 15 & 14&13&13
\end{array}$ Eleston Printing considers Color,Inc.stock to be a trading security and Black,Inc.and White,Inc.to be available-for-sale securities.
What will be the net gain or loss reported on the income statement of Eleston Printing for the 3 month period ending December 31,2X12?

Quizplus · Accepted Answer

For Color, Inc (trading security):
- Bought at $22 per share, sold 250 shares on Dec 31, 2012 at $21 per share
- Net loss = (250 shares x ($21-$22)/share) = $(250)
For Black, Inc (available-for-sale security):
- Bought at $22 per share, market value on 12/31/12 was $24 per share
- Unrealized gain = 300 shares x ($24-$22)/share = $600
- However, since it is an available-for-sale security, the unrealized gain is reported as other comprehensive income in the stockholders' equity section and not on the income statement.
For White, Inc (available-for-sale security):
- Bought at $14 per share, market value on 12/31/12 was $13 per share
- Unrealized loss = 500 shares x ($14-$13)/share = $(500)
- Again, since it is an available-for-sale security, the unrealized loss is reported as other comprehensive income in the stockholders' equity section and not on the income statement.
Therefore, the net gain or loss reported on the income statement for the 3 month period ending December 31, 2012 is the realized loss from Color, Inc, which is $(250).

Eleston Printing Acquired the Following Short-Term Equity Securities on January