Jack's by the Tracks has the following partial balance sheet: JACK'S BY THE TRACKS
Balance Sheet (partial)
$\begin{array}{lr}
\text { Stockholders' Equity: } & \
\text { Common Stock } & \$ 6,000,000 \
\text { Retained Earnings } & 2,000,000 \
\text { Total Paid-in capital and retained earnings } & 8,000,000 \
\text { Add: Unrealized gain on available-for-sale securities } & 800,000 \
\text { Total Stockholders' Equity. } & \$ 8,800,000
\end{array}$ What effect will the unrealized gain on available-for-sale securities have on comprehensive income?
A) No effect on comprehensive income.
B) Increase of $800,000 in comprehensive income.
C) Increase of $8,800,000 in comprehensive income.
D) Decrease of $800,000 in comprehensive income.

Question

Jack's by the Tracks has the following partial balance sheet: JACK'S BY THE TRACKS
 Balance Sheet (partial)
$\begin{array}{lr}
\text { Stockholders' Equity: } & \
\text { Common Stock } & \$ 6,000,000 \
\text { Retained Earnings } & 2,000,000 \
\text { Total Paid-in capital and retained earnings } & 8,000,000 \
\text { Add: Unrealized gain on available-for-sale securities } & 800,000 \
\text { Total Stockholders' Equity. } & \$ 8,800,000
\end{array}$ What effect will the unrealized gain on available-for-sale securities have on comprehensive income?
A) No effect on comprehensive income.
B) Increase of $800,000 in comprehensive income.
C) Increase of $8,800,000 in comprehensive income.
D) Decrease of $800,000 in comprehensive income.

Quizplus · Accepted Answer

Unrealized gains on available-for-sale securities are recorded in other comprehensive income until they are realized. Therefore, the $800,000 unrealized gain increases comprehensive income.

Jack's by the Tracks Has the Following Partial Balance Sheet