Question 1

Savan Co.purchased 14,000 shares of Briton Corporation's 40,000 shares of common stock on December 31,2012.This represented 35% of Briton's outstanding shares and gave Savan Co.significant influence over Briton's management and operations.On October 11,2013,Briton declared and paid cash dividends of $30,000.On December 31,2013,Briton reported net income of $125,000 for the year.Prepare the journal entries Savan Co.should record to account for its investment in Briton Corporation during 2013.

Accepted Answer

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

Question 2

A company had net income of $76,000 in 2012 and $88,000 in 2013.Its net sales were $640,000 in 2012 and $611,000 in 2013.Its average total assets in 2012 were $670,000 and $712,000 in 2013.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 3

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.

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Question 4

A company reported net income of $100,000 and average total assets of $425,000.Calculate its return on total assets.

Accepted Answer

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Question 5

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 6

A company paid $500,000 for 12% bonds with a par value of $500,000.The bonds pay 6% interest semiannually on September 1 and March 1.The company intends to hold the bonds until they mature.Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1) Bonds purchased on September 1,2012.
(2) Year-end adjusting entry,December 31,2012.
(3) Receipt of semiannual interest March 1,2013.
(4) Redemption of the bonds at maturity on August 31,2019.

Accepted Answer

The answer of A company paid $500,000 for 12% bonds...

Question 7

A company had net income of $450,000 in 2012 and $620,000 in 2013.The company had average total assets of $2,500,000 in 2012 and $3,000,000 in 2013.Calculate the return on total assets for 2012 and 2013.Comment on the results.

Accepted Answer

The answer of A company had net income of $450,000...

Question 8

On January 1,2012,Frederich Corporation purchased 7,500 shares of Sport Tech,Inc.as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000) shares of Sport Tech.Prepare the journal entries for Frederich to record the following transactions and events:

Accepted Answer

The answer of On January 1,2012,Frederich Corporation purchased 7,500 shares...

Question 9

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 Froxel Company must make to account for these transactions and events.

Accepted Answer

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

Question 10

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 this 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 11

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1.The company intends to hold the bonds until they mature.Prepare the journal entry to recognize accrued interest as of December 31 of the current year.

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The answer of On April 1 of the current year,a...

Question 12

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

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

Question 13

Detalo Co.held bonds of Schooner Corp.with a cost of $125,000 and a market value of $127,000.Detalo also held 1,500 shares of Tranco common stock with a cost of $25,000 and a market value of $24,700.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of December 31.

Accepted Answer

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Question 14

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

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Question 15

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 16

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1.The company intends to hold the bonds until they mature.Prepare the journal entry to record the receipt of the semiannual interest payment on April 1 of the following year.

Accepted Answer

The answer of On April 1 of the current year,a...

Question 17

A company reported net income for 2012 of $98,000 and $106,000 in 2013.It also reported net sales of $735,000 in 2012 and $798,000 in 2013.The company's average total assets in 2012 were $1,850,000 and $1,720,000 in 2013.Calculate this company's profit margin,total asset turnover,and return on total assets for 2012 and 2013.Comment on the results.

Accepted Answer

The answer of A company reported net income for 2012...

Question 18

Chrono Co.held bonds of Ayrford Co.with a cost of $125,000 and a year-end market value of $123,700.Chrono also held 1,500 shares of Avian common stock with a cost of $25,000 and a year-end market value of $26,100.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of its December 31 year-end.

Accepted Answer

The answer of Chrono Co.held bonds of Ayrford Co.with a...

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 necessary journal entry to record this sale.

Accepted Answer

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

Question 20

An investing company that owns more than ________ of another (investee) company's voting stock is presumed to have controlling influence over the investee.

Accepted Answer

The answer of An investing company that owns more than...

Quiz 15: Investments and International Operations