Lydell Capital, Inc., makes investmests in trading securities. Selected income s
ID: 2355751 • Letter: L
Question
Lydell Capital, Inc., makes investmests in trading securities. Selected income statement items for the years ended December 31, 2010 and 2011, plus selected items for comparative balance sheets are as follows:Lydell Capital, Inc.
Selected Income Statement Items
For the Years Ended December 31, 2010 and 2011
2010 2011
Operating income a e
Unrealized gain (loss) b $(2000)
Net Income c $14,000
Lydell Capital, Inc.
Selected Balance Sheet Items
December 31, 2009, 2010, and 2011
Dec. 31, 2009 Dec. 31, 2010 Dec. 31, 2011
Trading Investments, at no cost $123,000 $146000 $172,000
Valuation allowance for trading (6000) 9000 g
investments
Trading investments, at fair value d f h
Retained earnings $145000 $192,000 i
There were no dividend.
Determine the missing lettered items. If required, use the minus sign to indicate a net loss, unrealized losses, or a credit balance in the valuation allowance account.
a.
b.
c. 47000
d. $117,000
e.$16000
f. $155,000
g.$7000
h.179000
i.
Explanation / Answer
(a) $32,000: net income – unrealized gain
(47,000 - 15,000) = 32,000
(b) $15,000: change in valuation allowance from 2009 to 2010
9,000-(-6,000)= 9,000+6,000=15,000
(c) $47,000: change in RE from 2009 to 2010
(192,000-145,000)
(d) $117,000: Trading investments + or – Valuation allowance
(123,000 - 6,000)
(e) $12,000: net income- unrealized gain
$14,000-2,000 = $12,000
(f) $155,000: Trading investments + or – Valuation allowance
$146,00 + 9,000 = $155,000
(g) $7,000: 2010 valuation allowance – 2011 unrealized loss
($9,000 - 2,000)=$7,000
(h) 179,000: Trading investments + or – Valuation allowance
($172,000 + 7,000)
(i) $206,000: 2011 net income + beg. RE
($14,000+ 192,000) = $206,000
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