Market_Value_Solutions

Market_Value_Solutions - Market Value Exercises Solutions 9...

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Market Value Exercises - Solutions 9. Roller Coaster Coaster Investment Corp. Worksheets-Conventional Accounting Investment Investment Owners' Description Cash in stock in bonds equity Beg. bal., 2002 100,000 100,000 Investment in stocks & bonds (90,000) 70,000 20,000 Adm. expenses (5,000) (5,000)E Dividends 4,000 4,000R Interest 2,000 2,000R __________________________________________________________________ Bal. 12/31/02 11,000 70,000 20,000 101,000 Adm expenses (1,250) (1,250)E Dividends 4,500 4,500R Interest 2,000 2,000R __________________________________________________________________ Bal. 12/31/03 16,250 70,000 20,000 106,250 Adm. expenses (2,000) (2,000)E Sale of stock 90,000 (70,000) 20,000G Sale of bonds * 18,000 (20,000) (2,000)L ___________________________________________________________________ Balances, 12/31/04 122,250 -0- -0- 122,250 ___________________________________________________________________ Roller Coaster Coaster Investment Corp. Conventional Accounting Income Statements For 2002, 2003, 2004 2002 2003 2004 Revenue: Dividends $4,000 $4,500 -0- Interest 2,000 2,000 -0- Total $6,000 $6,500 -0- Less: Adm. expense (5,000) (1,250) (2,000) Gain from sale of stock 20,000 Loss from sale of bonds (2,000 ) Net income $1,000 $5,250 $16,000 1
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* For simplicity, the proceeds are not allocated between accrued interest and the bonds per se. Roller Coaster Coaster Investment Corp. Worksheets: Mark-to-Market Accounting Investment Investment Owners' Description Cash in stock in bonds equity Beg. bal., 2002 100,000 100,000 Investment in stocks & bonds (90,000) 70,000 20,000 Adm. expenses (5,000) (5,000)E
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