Cold Cat Inc., a snowmobile manufacturer, reported the following in its 20X5 annual report to shareholders:

Trading securities consist of $54,608,000 and $41,707,000 invested in various corporate bonds at March 31, 20X5 and 20X4, respectively, while the remainder of trading securities and available-for-sale securities consist primarily of A-rated or higher municipal bond investments. The amortized cost and fair value of debt securities classified as available-for-sale was $3,105,000 and $3,196,000, at March 31, 20X5. The unrealized holding gain on available-for-sale debt securities is reported, net of tax, as a separate component of shareholders' equity.

Cold Cat Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended March 31,

Accumulated Other Comprehensive Income changed by the following amounts:

NOTE B - SHORT-TERM INVESTMENTS
Short-term investments consist primarily of a diversified portfolio of municipal and corporate bonds and are classified as follows at March 31:

In its 20X4 annual report, Cold Cat disclosed, "The contractual maturities of available-for-sale debt securities at March 31, 20X4, are $3,573,000 within one year and $3,340,000 from one year through five years."
-What gain or loss would be realized if the available for sale securities on Cold Cat's 3/31/X5 balance sheet were sold immediately for their fair value? Prepare any reclassification entry and an entry that would record the sale (ignore taxes).

Question

Cold Cat Inc., a snowmobile manufacturer, reported the following in its 20X5 annual report to shareholders:

Trading securities consist of $54,608,000 and $41,707,000 invested in various corporate bonds at March 31, 20X5 and 20X4, respectively, while the remainder of trading securities and available-for-sale securities consist primarily of A-rated or higher municipal bond investments. The amortized cost and fair value of debt securities classified as available-for-sale was $3,105,000 and $3,196,000, at March 31, 20X5. The unrealized holding gain on available-for-sale debt securities is reported, net of tax, as a separate component of shareholders' equity.

Cold Cat Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended March 31,

Accumulated Other Comprehensive Income changed by the following amounts:

NOTE B - SHORT-TERM INVESTMENTS
Short-term investments consist primarily of a diversified portfolio of municipal and corporate bonds and are classified as follows at March 31:

In its 20X4 annual report, Cold Cat disclosed, "The contractual maturities of available-for-sale debt securities at March 31, 20X4, are $3,573,000 within one year and $3,340,000 from one year through five years."
-What gain or loss would be realized if the available for sale securities on Cold Cat's 3/31/X5 balance sheet were sold immediately for their fair value? Prepare any reclassification entry and an entry that would record the sale (ignore taxes).

Quizplus · Accepted Answer

The Answer of Cold Cat Inc., a snowmobile manufacturer, reported the following in its 20X5 annual report to shareholders:

Trading securities consist of $54,608,000 and $41,707,000 invested in various corporate bonds at March 31, 20X5 and 20X4, respectively, while the remainder of trading securities and available-for-sale securities consist primarily of A-rated or higher municipal bond investments. The amortized cost and fair value of debt securities classified as available-for-sale was $3,105,000 and $3,196,000, at March 31, 20X5. The unrealized holding gain on available-for-sale debt securities is reported, net of tax, as a separate component of shareholders' equity.

Cold Cat Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended March 31,

Accumulated Other Comprehensive Income changed by the following amounts:

NOTE B - SHORT-TERM INVESTMENTS
Short-term investments consist primarily of a diversified portfolio of municipal and corporate bonds and are classified as follows at March 31:

In its 20X4 annual report, Cold Cat disclosed, "The contractual maturities of available-for-sale debt securities at March 31, 20X4, are $3,573,000 within one year and $3,340,000 from one year through five years."
-What gain or loss would be realized if the available for sale securities on Cold Cat's 3/31/X5 balance sheet were sold immediately for their fair value? Prepare any reclassification entry and an entry that would record the sale (ignore taxes).