Question 1

On January 2,Froxel Company purchased 10,000 shares of Sandia Corp.common stock at $19 per share plus a $3,000 commission.This represents 30% of Sandia Corp.'s outstanding stock.On August 6,Sandia Corp.declared and paid cash dividends of $1.75 per share,and on December 31 it reported net income of $150,000.Prepare the necessary entries for Froxel to account for these transactions and events.

Accepted Answer

The answer of On January 2,Froxel Company purchased 10,000 shares...

Question 2

Schoodic Company had the following long-term available-for-sale securities in its portfolio at December 31 for each of the years listed.The year-end cost and fair values for its portfolio follow.Beginning with Year 1,prepare the appropriate journal entry to record each year-end market adjustment for these securities.

Accepted Answer

The answer of Schoodic Company had the following long-term available-for-sale...

Question 3

A company had net income of $45,000,net sales of $390,000,and average total assets of $250,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

Accepted Answer

The answer of A company had net income of $45,000,net...

Question 4

Columbia Corp.held 1,500 of Vianco common stock with a cost of $74,387.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record this sale.

Accepted Answer

The answer of Columbia Corp.held 1,500 of Vianco common stock...

Question 5

A company had net income of $76,000 in Year 1 and $88,000 in Year 2.Its net sales were $640,000 in Year 1 and $611,000 in Year 2.Its average total assets in Year 1 were $670,000 and $712,000 in Year 2.Calculate the profit margin,total asset turnover and return on total assets for both years.Comment on the results.

Accepted Answer

The answer of A company had net income of $76,000...

Question 6

On October 31,Mayfair Co.received cash dividends of $0.15 per share from its investment in Carter Corp.'s common stock.Mayfair owned 1,200 shares of Carter Corp.'s stock on October 31.The investment is considered available-for-sale.Prepare the investor's journal entry to record the receipt of the cash dividends.

Accepted Answer

The answer of On October 31,Mayfair Co.received cash dividends of...

Question 7

__________________________ are investments in securities that are not readily convertible to cash,or are not intended to be converted to cash in the short-term.

Accepted Answer

The answer of __________________________ are investments in securities that are...

Question 8

Eaton Company had the following long-term available-for-sale securities in its portfolio at December 31,Year 1.Eaton had several long-term investment transactions during the next year.After analyzing the effects of each transaction,(1)determine the amount Eaton should report on its December 31,Year 1 balance sheet for its long-term investments in available-for-sale securities,(2)determine the amount Eaton should report on its December 31,Year 2 balance sheet for its long-term investments in available-for-sale securities,(3)prepare the necessary adjusting entry to record the fair value adjustment at December 31,Year 2.

Accepted Answer

The answer of Eaton Company had the following long-term available-for-sale...

Question 9

Wiffery Company had the following trading securities in its portfolio at December 31.The Fair Value Adjustment - Trading account had a balance of zero prior to year-end adjustment.Prepare the appropriate adjusting journal entry.

Accepted Answer

The answer of Wiffery Company had the following trading securities...

Question 10

A company reported net income of $275,000,net sales of $2,500,000,and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

Accepted Answer

The answer of A company reported net income of $275,000,net...

Question 11

Savan Co.purchased 14,000 shares of Briton Corporation's 40,000 shares of common stock on January 1.This represented 35% of Briton's outstanding shares and gave Savan Co.significant influence over Briton's management and operations.On October 11,Briton declared and paid cash dividends of $30,000.On December 31,Briton reported net income of $125,000 for the year.Prepare the journal entries Savan Co.should record to account for the dividends received and the earnings reported by Briton Corporation.

Accepted Answer

The answer of Savan Co.purchased 14,000 shares of Briton Corporation's...

Question 12

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $735,000 in Year 1 and $798,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1and Year 2.Comment on the results.

Accepted Answer

The answer of A company reported net income for Year...

Question 13

Halam Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.

Accepted Answer

The answer of Halam Company had the following transactions relating...

Question 14

___________________________ are investments in securities that management intends to convert to cash within the longer of one year or the operating cycle,and are readily convertible to cash.

Accepted Answer

The answer of ___________________________ are investments in securities that management...

Question 15

Kramer Corporation had the following long-term investment transactions.
  Prepare the journal entries Kramer Corporation should record for these transactions and events.

Accepted Answer

The answer of Kramer Corporation had the following long-term investment...

Question 16

Clarity Corporation had the following transactions involving investments in trading securities during the year.Prior to these transactions,Clarity had never had any investments in trading securities.Prepare the required general journal entries to record these transactions.

Accepted Answer

The answer of Clarity Corporation had the following transactions involving...

Question 17

On January 1,2011,Freder Corporation purchased 7,500 shares of SportTech as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000)shares of SportTech.Prepare the journal entries for Freder to record the following transactions and events:

Accepted Answer

The answer of On January 1,2011,Freder Corporation purchased 7,500 shares...

Question 18

Acadia had no investments prior to the current year.It had the following transactions involving available-for-sale and held-to-maturity securities during the year.The stock purchases are considered short-term available-for-sale securities.Prepare journal entries to record the transactions and events associated with the investment purchases.

Accepted Answer

The answer of Acadia had no investments prior to the...

Question 19

Marina,Inc.,held 1,500 of Navia common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare the journal entry to record this sale.

Accepted Answer

The answer of Marina,Inc.,held 1,500 of Navia common stock with...

Question 20

Investments in equity securities where the investor has a controlling influence are accounted for using the ________________________________.

Accepted Answer

The answer of Investments in equity securities where the investor...

Quiz 15: Investments and International Operations