P17-10 (Gain on Sale of Investments and Comprehensive Income) On January 1, 2014, Acker Inc. had the following balance sheet.Inv

P17-10 (Gain on Sale of Investments and Comprehensive Income) On January 1, 2014, Acker Inc. had
the following balance sheet.Inv
P17-7 (Available-for-Sale and Held-to-Maturity Debt Securities Entries) The following information
relates to the debt securities investments of Wildcat Company.
1. On February 1, the company purchased 10% bonds of Gibbons Co. having a par value of $300,000
at 100 plus accrued interest. Interest is payable April 1 and October 1.
2. On April 1, semiannual interest is received.
3. On July 1, 9% bonds of Sampson, Inc. were purchased. These bonds with a par value of $200,000
were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1.
4. On September 1, bonds with a par value of $60,000, purchased on February 1, are sold at 99 plus
accrued interest.
5. On October 1, semiannual interest is received.
6. On December 1, semiannual interest is received.
7. On December 31, the fair value of the bonds purchased February 1 and July 1 are 95 and 93, respectively.
Instructions
(a) Prepare any journal entries you consider necessary, including year-end entries (December 31),
assuming these are available-for-sale securities.
(b) If Wildcat classified these as held-to-maturity investments, explain how the journal entries would
differ from those in part (a).
P17-10 (Gain on Sale of Investments and Comprehensive Income) On January 1, 2014, Acker Inc. had
the following balance sheet.
BALANCE SHEET
AS OF JANUARY 1, 2014
Assets Equity
Cash $ 50,000 Common stock $260,000
Equity investments (available-for-sale) 240,000 Accumulated other comprehensive income 30,000
Total $290,000 Total $290,000

The accumulated other comprehensive income related to unrealized holding gains on available-for-sale
securities. The fair value of Acker Inc.’s available-for-sale securities at December 31, 2014, was $190,000; its
cost was $140,000. No securities were purchased during the year. Acker Inc.’s income statement for 2014
was as follows. (Ignore income taxes.)
Instructions
(Assume all transactions during the year were for cash.)
(a) Prepare the journal entry to record the sale of the available-for-sale securities in 2014.
(b) Prepare a statement of comprehensive income for 2014.
(c) Prepare a balance sheet as of December 31, 2014.
ACKER INC.
2014.
(c) Prepare a balance sheet as of December 31, 2014.
ACKER INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
Dividend revenue $ 5,000
Gain on sale of investments 30,000
Net income $35,000
3 6
At the end of 2015, Kennedy Company changed its intent relative to its investment in Frank, Inc.
and reclassified the shares to trading securities status when the shares were selling for $8 per share.
(b) What should be reported on the face of Kennedy’s December 31, 2015, balance sheet relative to
available-for-sale securities investments? What should be reported to reflect the transactions above
in Kennedy’s 2015 income statement?

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