Teasdale Inc.
Balance Sheet
December 31, 2015 and 2014
Dec. 31, 2015 Dec. 31, 2014
Cash $160,000 $156,000
Accounts receivable (net) 115,000 108,000
Available-for-sale investments (at cost)—Note 1 a. 91,200
Plus valuation allowance for available-for-sale investments b. 8,776
Available-for-sale investments (fair value) $ c. $ 99,976
Interest receivable $ d. —
Investment in Wright Co. stock—Note 2 e. $ 69,200
Office equipment (net) 96,000 105,000
Total assets $ f. $538,176
Accounts payable $ 91,000 $ 72,000
Common stock 80,000 80,000
Excess of issue price over par 250,000 250,000
Retained earnings g. 127,400
Unrealized gain (loss) on available-for-sale investments h. 8,776
Total liabilities and stockholders’ equity $ i. $538,176
Note 1. Investments are classified as available for sale. The investments at cost and
fair value on December 31, 2014, are as follows:
No. of Shares Cost per Share Total Cost Total Fair Value
Alvarez Inc. stock 960 $38.00 $36,480 $39,936
Hirsch Inc. stock 1,900 28.80 54,720 60,040
$91,200 $99,976
Note 2. The Investment in Wright Co. stock is an equity method investment representing 30% of the outstanding shares of Wright Co.
The following selected investment transactions occurred during 2015:
Mar. 18. Purchased 800 shares of Richter Inc. at $40 including brokerage commission. Richter is classified as an available-for-sale security.
July 12. Dividends of $12,000 are received on the Wright Co. investment.
Oct. 1. Purchased $24,000 of Toon Co. 4%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1.
Dec. 31. Wright Co. reported a total net income of $80,000 for 2015. Teasdale recorded equity earnings for its share of Wright Co. net income.
Dec. 31. Accrued interest for three months on the Toon Co. bonds purchased on October 1.
31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts:
Available-for-Sale
Investments Fair Value
Alvarez Inc. stock $41.50 per share
Hirsch Inc. stock $26.00 per share
Richter Inc. stock $48.00 per share
Toon Co. bonds 101 per $100 of face amount
31. Closed the Teasdale Inc. net income of $51,240 for 2015. Teasdale Inc. paid no dividends during 2015.
Instructions
Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.
Answer:
a. $147,200 (from table)
b. $4,680 ($151,880 – $147,200, from table)
c. $151,880 (from table)
Market
Cost per Value per
No. of Share (or Share (or
Shares (or $100 of $100 of Total Fair
face amount) face amount) face amount) Cost Value
Alvarez Inc. stock…… 960 $38.00 $41.50 $ 36,480 $ 39,840
Hirsch Inc. stock……… 1,900 28.80 26.00 54,720 49,400
Richter Inc. stock…… 800 40.00 48.00 32,000 38,400
Toon Co. bonds……… $24,000 100 101 24,000 24,240
$147,200 $151,880
d. $240 ($24,000 × 4% × 3/12)
e. $81,200 [$69,200 + ($80,000 × 30%) – $12,000]
f. $604,320 ($160,000 + $115,000 + $151,880 + $240 + $81,200 + $96,000)
g. $178,640 ($127,400 + $51,240)
h. $4,680 [same as (b)]
i. $604,320 ($91,000 + $80,000 + $250,000 + $178,640 + $4,680)
The completed comparative unclassified balance sheets are as follows:
TEASDALE, INC.
Balance Sheet
December 31, 2015 and 2014
Dec. 31,
2015
Dec. 31,
2014
Cash $160,000 $156,000
Accounts receivable (net) 115,000 108,000
Available-for-sale investments (at cost)—Note 1 $147,200 $ 91,200
Plus valuation allowance for available-for-sale
investments 4,680 8,776
Available-for-sale investments (fair value) $151,880 $ 99,976
Interest receivable $ 240 $ —
Investment in Wright Co. stock—Note 2 81,200 69,200
Office equipment (net) 96,000 105,000
Total assets $604,320 $538,176
Accounts payable $ 91,000 $ 72,000
Common stock 80,000 80,000
Excess of issue price over par 250,000 250,000
Retained earnings 178,640 127,400
Unrealized gain (loss) on available-for-sale
investments 4,680 8,776
Total liabilities and stockholders’ equity $604,320 $538,176
Note 1. Investments are classified as available for sale. The investments at cost
and fair value on December 31, 2014, are as follows:
No. of Cost per Total Total Fair
Shares Share Cost Value
Alvarez Inc. stock…………………… 960 $38.00 $36,480 $39,936
Hirsch Inc. stock…………………… 1,900 $28.80 54,720 60,040
$91,200 $99,976
For December 31, 2015:
Market
Cost per Value per
No. of Share (or Share (or
Shares (or $100 of $100 of Total Fair
face amount) face amount) face amount) Cost Value
Alvarez Inc. stock… 960 $38.00 $41.50 $ 36,480 $ 39,840
Hirsch Inc. stock…… 1,900 28.80 26.00 54,720 49,400
Richter Inc. stock… 800 40.00 48.00 32,000 38,400
Toon Co. bonds…… $24,000 100 101 24,000 24,240
$147,200 $151,880
Note 2. The Investment in Wright Co. stock is an equity method investment
representing 30% of the outstanding shares of Wright Co.