Question
1.Gaines Corporation invested $124,000 to acquire 21,000 shares of Owens Technologies, Inc. on March 1, 2024. On July 2, 2025, Owens pays a cash dividend
1.Gaines Corporation invested $124,000 to acquire 21,000 shares of Owens Technologies, Inc. on March 1, 2024. On July 2, 2025, Owens pays a cash dividend of $1.25 per share. The investment is classified as equity securities with no significant influence. Which of the following is the correct journal entry to record the transaction on July 2, 2025?
A.
Cash
26,250
Equity Investments
26,250
B.
Cash
26,250
Retained Earnings
26,250
C.
Equity Investments
26,250
Cash
26,250
D.
Cash
26,250
Dividend Revenue
26,250
2. Smith Company disposes of a bond it has invested in at maturity. Assuming all interest has been paid and recorded, the entry to record the disposal of the bond is: A. debit Cash; credit Held-to-Maturity Debt Investments
B. debit Cash; credit Equity Investments
C. debit Held-to-Maturity Debt Investments; credit Cash
D. debit Equity Investments; credit Cash
3. A common reason for a business to invest in debt or equity securities would be ________.
A. to generate investment income
B. to invest short-term, excess cash
C. to pursue certain business strategies
D. of the above
1.Gaines Corporation invested $124,000 to acquire 21,000 shares of Owens Technologies, Inc. on March 1, 2024. On July 2, 2025, Owens pays a cash dividend of $1.25 per share. The investment is classified as equity securities with no significant influence. Which of the following is the correct journal entry to record the transaction on July 2, 2025?
A. |
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B. |
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C. |
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D. |
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A. | debit Cash; credit Held-to-Maturity Debt Investments | |||||||||||||
B. | debit Cash; credit Equity Investments | |||||||||||||
C. | debit Held-to-Maturity Debt Investments; credit Cash | |||||||||||||
D. | debit Equity Investments; credit Cash 3. A common reason for a business to invest in debt or equity securities would be ________.
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