Question
P Co received a cash dividend from a common stock investment. Should P report an de crease in the investment account if it uses the
P Co received a cash dividend from a common stock investment. Should P report an decrease in the investment account if it uses the cost method or equity method of accounting?
Select one:
a. cost & equity no
b. cost no , equity yes
c. cost & equity yes
d. cost yes ,equity no
P CO owns a 90% interest in S Co, purchased at a time when the book values of S recorded assets and liabilities were equal to fair values. During 2014, S sold merchandise to P cost 32,000 for $40,000 . At December 31, 2014, 75% of this merchandise is still in P inventory. Separate incomes for P&S are summarized as follows:
P S
Sales 900,000 200,000
Cost of sales 400,000 100,000
Gross profit 500,000 100,000
Operating expenses 200,000 80,000
Separate income 300,000 20,000
What is amount of total sales in consolidated income statement?
Select one: a. 1,100,000 b. 1,066,000 c. 1,060,000 d. 1,068,000
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