1. On February 15, Jewel Company buys 8,000 shares of Marcelo Corp. at $28.63 per share. The stock is classified as a stock investment with insignificant influence. This is the companys first and only stock investment. On March 15, Marcelo Corp. declares a dividend of $1.15 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $29.41 per share. The fair value of the remaining shares is $29.61 per share. The impact on Jewels net income as a result of its investment in Marcelo Corp. was a(n):

Multiple Choice

• Increase to income of $16,240.

• Increase to income of $12,320.

• Increase to income of $9,200.

• Decrease to income of $9,200.

• Decrease to income of $6,080.

2. On January 4, Year 1, Barber Company purchased 8,500 shares of Convell Company for $104,400 . Convell Company has a total of 42,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.75 per share, and its net income was $93,000 and $88,000 for Year 1 and Year 2, respectively. The January 2, Year 3, entry to record Barber's sale of 5,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $68,850 cash, should be:

Multiple Choice

• Debit Cash $68,850; debit Loss on Sale of Stock Investment $6,210; credit Equity Method Investments $62,640.

• Debit Cash $68,850; debit Loss on Sale of Investment $7,860; credit Equity Method Investments $76,710.

• Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $56,100.

• Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $81,600.

• Debit Cash $68,850; debit Loss on Sale of Stock Investment $35,550; credit Equity Method Investments $104,400.