PR 15-4A Investment reporting
Luminous Publishing, Inc., is a book publisher. The comparative unclassified balance sheets for December 31, 2013 and 2012 are provided below. Selected missing balances are shown by letters.
| Luminous Publishing, Inc. | ||
| Balance Sheet | ||
| December 31, 2013 and 2012 | ||
| Dec. 31, 2013 | Dec. 31, 2012 | |
| Cash | $178,000 | $157,000 |
| Accounts receivable (net) | 106,000 | 98,000 |
| Available-for-sale investments (at cost)—Note 1 | a. | 53,400 |
| Less valuation allowance for available-for-sale investments | b. | 3,900 |
| Available-for-sale investments (fair value) | $ c. | $49,500 |
| Interest receivable | $ d. | — |
| Investment in Quest Co. stock—Note 2 | e. | $55,000 |
| Offi ce equipment (net) | 90,000 | 95,000 |
| Total assets | $ f. | $454,500 |
| Accounts payable | $56,900 | $51,400 |
| Common stock | 50,000 | 50,000 |
| Excess of issue price over par | 160,000 | 160,000 |
| Retained earnings | g. | 197,000 |
| Less unrealized gain (loss) on available-for-sale investments | h. | 3,900 |
| Total liabilities and stockholders’ equity | $ i. | $454,500 |
Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, 2012, are as follows:
| No. of Shares | Cost per Share | Total Cost | Total Fair Value | |
| Barns Co. Stock | 1,600 | $12 | $19,200 | $17,500 |
| Dynasty Co. Stock | 900 | 38 | 34,200 | 32,000 |
| $53,400 | $49,500 |
Note 2. The investment in Quest Co. stock is an equity method investment representing 32% of the outstanding shares of Quest Co.
The following selected investment transactions occurred during 2013:
| May 5. | Purchased 2,200 shares of Gypsy, Inc., at $22 per share including brokerage commission. Gypsy, Inc., is classified as an available-for-sale security. | |
| Sept. 1. | Purchased $30,000 of Norton Co. 5%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on September 1 and March 1. | |
| 9. | Dividends of $9,000 are received on the Quest Co. investment. | |
| Dec. 31. | Quest Co. reported a total net income of $80,000 for 2013. Luminous recorded equity earnings for its share of Quest Co. net income. | |
| 31. | Accrued four months of interest on the Norton bonds. | |
| 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 | |
| Barns Co. stock | $11 per share | |
| Dynasty Co. stock | $33 per share | |
| Gypsy Inc. stock | $23 per share | |
| Norton Co. bonds | 98 per $100 of face value | |
| Dec. 31. | Closed the Luminous Publishing Inc. net income of $114,000 for 2013. Luminous paid no dividends during 2013. | |
Instructions
Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.
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