During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows: Security Shares Purchased Cost Hawking Inc. 750 $33,375 Pavlov Co. 2,030 47,096 Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $53 per share and the Pavlov Co. stock had a market value of $42 per share. Galileo Company had net income of $258,300 and paid no dividends for the year ending December 31, Year 1. All of the available-for-sale investments are classified as current assets. a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments.

See the explanation below.

Explanation:

The data in the question are merged and they are separated first before the question is answered as follows:

Security Shares Purchased Cost ($)

Hawking Inc. 750 33,375

Pavlov Co. 2,030 47,096

The answers and explanation are now as follows:

Hawking Inc. market value = $53 * 750 = $39,750

Pavlov Co. market value = $42 * 2,030 = $85,260

Total market value stock = $125,010

Total cost of stock = $33,375 + 47,096 = $80,471

Unrealized gain from stock = Market value - Cost = $125,010 - $80,471 = $44,539

Galileo Company

Balance Sheet (Selected Items)

December 31, Year 1.

Details Amount ($)

Current Assets:

Available-for-sale investments, at Cost. 80,471

Valuation allowance for available-for-sale investments 44,539

Total 125,010