Answer the following questions on Week 7 - Investments:

1. On 1/1/21, URBN purchases 45,000 of the 120,000 outstanding shares of Urban Outfitters for $100 per share. During 2021, Urban Outfitters reports net income of $500,000 and pays total dividends to common shareholders of $200,000. URBN's 2021 pre-tax net income will be ________ because of this investment.

a) $75,000 higher

b) $187,500 higher

c) $200,000 higher

d) $262,500 higher

2. On 1/1/21, URBN purchases 45,000 of the 120,000 outstanding shares of Urban Outfitters for $100 per share. During 2021, Urban Outfitters reports net income of $500,000 and pays total dividends to common shareholders of $200,000. URBN's 12/31/21 balance sheet will show $______ for the investment account.

- NO OPTIONS GIVEN

3. True or False: If a company sells an Investment and the cash received from the investment sale is less than the Investment value on the company's books, the company will report a 'Loss on Sale of Investment.'

4. On 1/1/21, Amir Inc. purchases 10,000 shares of Elin Energy common stock for $115 per share. Elin Energy has 20,000,000 total shares of common stock outstanding. On 12/31/21, the Elin shares are trading at $104 per share. Amir Inc. will record the following journal entry to reflect the 2021 unrealized gain/loss related to this investment:

a) Dr. Investment 110,000 and Cr. Unrealized Loss 110,000

b) Dr. Investment 110,000 and Cr. Unrealized Gain 110,000

c) Dr. Unrealized Gain 110,000 and Cr. Investment 110,000

d) Dr. Unrealized Gain 110,000 and Cr. Investment 110,000

5. True or False: If a company purchases 100% of another company's stock, the Accounts Payable balance shown on the consolidated Balance Sheets will reflect both companies' Accounts Payable.