(Gain on Sale of Investments and Comprehensive Income) On January 1, 2014, Acker Inc. had the following balance sheet.
ACKER INC.
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.)
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
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.