E2-1 Multiple-Choice Questions on Use of Cost and Equity Methods [AICPA Adapted] Select the correct answer for each of the following questions. 1. Peel Company received a cash dividend from a common stock investment. Should Peel report an increase in the investment account if it uses the cost method or equity method of accounting? Cost Equity a. No No b. Yes Yes Yes d. No No Yes 2. In 20X0, Neil Company held the following investments in common stock: 25,000 shares of B&K Inc.'s 100,000 outstanding shares. Neil's level of ownership gives it the ability to exercise significant influence over the financial and operating policies of B&K 6,000 shares of Amal Corporation's 309,000 outstanding shares. During 20X0, Neil received the following distributions from its common stock investments: $30,000 cash dividend from B&K $1,500 cash dividend from Amal November 6 November 11 December 26 3 percent common stock dividend from Amal The closing price of this stock was $115 per share. What amount of dividend revenue should Neil report for 20X0? a. $1,500. b. $4,200. c. $31,500. d. $34,200.