During 2012, its first year of operation, Newton Company purchased two available-for-sale investments as follows:
Assume that as of December 31, 2012, the Starlight Products, Inc., stock had a market value of $55 per share and the Reynolds Co. stock had a market value of $18 per share. Newton Company had net income of $250,000, and paid no dividends for the year ending December 31, 2012.
a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.
b. Prepare the Stockholders’ Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.