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18 September, 12:22

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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  1. 18 September, 15:15
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    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
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