Flint Corporation began operations on January 1, 2020 when $233,000 was invested by shareholders of the company. On March 1, 2020, Flint purchased for cash $109,000 of debt securities that it classified as available-for-sale. During the year, the company received cash interest of $7,500 on these securities. In addition, the company has an unrealized holding loss on these securities of $13,800 net of tax. Determine the following amounts for 2020: (a) net income, (b) comprehensive income, (c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2020).

Question

Business

Karlie

29 October, 23:03

Flint Corporation began operations on January 1, 2020 when $233,000 was invested by shareholders of the company. On March 1, 2020, Flint purchased for cash $109,000 of debt securities that it classified as available-for-sale. During the year, the company received cash interest of $7,500 on these securities. In addition, the company has an unrealized holding loss on these securities of $13,800 net of tax. Determine the following amounts for 2020: (a) net income, (b) comprehensive income, (c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2020).

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Answers (1)

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Todd · Answer 1

The answer to the questions are (a) $7,500 (b) 6,300 (c) $13,800 (d) $13,800

Explanation:

Solution

Recall that,

(a) The net income is given as:

Divided income = $7,500

The net income is = $7,500

(b) the next step is to solve for the comprehensive income

Comprehensive income becomes:

Net income = $7,500

The unrealized holding loss on these securities = $13,800

= 13,800 - 7,500 = 6,300

The comprehensive income is $6,300

(c) Other comprehensive income:

The other comprehensive income is the unrealized holding loss and Other comprehensive income which is $13,800

(d) The accumulated other comprehensive income (end of 2020):

The beginning balance = $0

The ending balance of other comprehensive income is = $13,800