Question
On January 4, Year 1, Larsen Company purchased 14,500 shares of Warner Company for $174,000 plus a broker's fee of $4,800. Warner Company has a
On January 4, Year 1, Larsen Company purchased 14,500 shares of Warner Company for $174,000 plus a broker's fee of $4,800. Warner Company has a total of 72,500 shares of common stock outstanding and it is presumed the Larsen Company will have a significant influence over Warner. During each of the next two years, Warner declared and paid cash dividends of $0.75 per share, and its net income was $129,000 and $124,000 for Year 1 and Year 2, respectively. The January 12, Year 3, entry to record the sale of 8,700 shares of Warner Company stock for $117,450 cash should be:
A) Debit Cash $117,450; debit Loss on Sale of Investment $61,350; credit Long-Term Investments $178,800.
B) Debit Cash $117,450; debit Loss on Sale of Investment $21,750; credit Long-Term Investments $95,700.
C)Debit Cash $117,450; debit Loss on Sale of Investment $10,170; credit Long-Term Investments $107,280.
D) Debit Cash $117,450; debit Loss on Sale of Investment $7,140; credit Long-Term Investments $124,590.
E) Debit Cash $117,450; debit Loss on Sale of Investment $21,750; credit Long-Term Investments $139,200
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started