On November 1, 2014, Mica’s Restaurant decides to invest excess cash of $ 50,000 from the tourist season by purchasing 2,500 shares of Bison, Inc. stock at $ 20 per share. At year- end, December 31, 2014, Bison’s market price was $ 19 per share. The investment is categorized as an available- for- sale investment and will be held for the short-term.
1. Journalize the transactions for Mica’s investment in Bison, Inc. for 2014.
2. In what category and at what value would Mica report the asset on the December 31, 2014, balance sheet? In what account would the market price change in Bison’s stock be reported, if at all?
3. What was the net effect of the investment on Mica’s net income for the year ended December 31, 2014?