LM's, Inc Reported Net Income for the Year Ending December 31

question 51

Essay

LM's, Inc. reported net income for the year ending December 31 of $483,500. Dividends paid during the year totaled $52,900. The company holds available-for-sale securities with an original cost of $162,000 and a fair value of $181,000 at the end of the year. They also hold trading securities with an original cost of $150,000 and a fair value of $147,000. Retained earnings on January 1 was $736,400 and accumulated other comprehensive income on January 1 as $16,200.

Calculate the following balances to be reported in the financial statements dated December 31.
a. Valuation allowance for available-for-sale securities
b. Comprehensive income
c. Retained earnings
d. Accumulated other comprehensive income

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating its financial health over a specific period.

Lower-of-Cost-Or-Market

An accounting principle that dictates inventory should be recorded at either its historical cost or its current market price, whichever is lower.

Net Income

The amount of money that remains from revenues after all expenses, taxes, and costs have been subtracted; a crucial indicator of a company's profitability.

Ending Inventory

The value of goods available for sale at the end of an accounting period.