Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Assume that Reliable Networks owns the following long-term available-for-sale investments: Number Cost per Year-end Fair Dividend Company of Shares Share Value per Share per

1. Assume that Reliable Networks owns the following long-term available-for-sale investments:

Number

Cost per

Year-end Fair

Dividend

Company

of Shares

Share

Value per Share

per Share

Hoile Corp.

1,200

$

60

$

65

$

1.80

Rosewood, Inc.

100

$

11

$

12

$

1.70

Sticks Ltd.

600

$

16

$

30

$

1.10

Reliable's balance sheet at year end should report

A.investments of $97,200.

B. investments of $82,700.

C. dividend revenue $2,990.

D.unrealized loss of $14,500.

2. On January 1, 2014, Benson Corporation paid $810,000 to purchase 40% of the outstanding stock of Kroger Company. Kroger Company reported net income of $160,000 for the year ending December 31, 2014 and paid cash dividends of $70,000 during 2014. On January 1, 2015, Benson Corporation sells its entire investment in Kroger Company for $1,400,000. Benson Corporation will report a(n):

A.realized gain on the sale of $554,000.

B. unrealized gain on the sale of $554,000.

C.realized gain on the sale of $590,000.

D.unrealized gain on the sale of $590,000.

3.An investor owns 34% of the outstanding common stock of Leshan Company. Leshan Company reports net income of $60,000 for the current year. What journal entry should the investor prepare?

A. debit Cash for $20,400 and credit EquityMethod Investment for $20,400.

B. debit Cash for $20,400 and credit Dividend Revenue for $20,400.

C. debit EquityMethod Investment Revenue for $20,400 and credit EquityMethod Investment for $20,400.

D. debit EquityMethod Investment for $20,400 and credit EquityMethod Investment Revenue for $20,400.

4. A company has a longterm Investment in AvailableforSale Securities. The intent is to hold the stock investment for many years, but not until maturity. The investor's percentage ownership is 5%. On January 1, 2014, the purchase date, the cost of the stock investment was $96,000. On December 31, 2014, the fair value of the investment is $94,000. An allowance account is used to writedown the investment. On January 10, 2015, the investor sold the stock for $89,200. What journal entries are required on January 10, 2015?

A. debit Allowance to Adjust Investment in AvailableforSale Securities to Market for $2,000 and credit Unrealized Loss on Investment in AvailableforSale Securities for $2,000

B. debit Cash for $89,200, debit Loss on Sale of Investment in AvailableforSale Securities for $4,800 and credit Investment in AvailableforSale Securities for $96,000

C.debit Cash for $89,200, debit Loss on Sale of Investment of AvailableforSale Securities for $4,800 and credit Investment in AvailableforSale Securities for $94,000

D. A and B

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Agile Governance And Audit An Overview For Auditors And Agile Teams

Authors: Christopher Wright

1st Edition

184928587X, 978-1849285872

More Books

Students also viewed these Accounting questions

Question

Show that the circuit in Fig. 6.90 is a noninverting integrator. wi

Answered: 1 week ago