Solved

Match for Each Transaction the Best Effect You May Use

Question 108

Matching

match for each transaction the best effect You may use each choice more than once or not at all. All transactions involve a passive investment in equity securities unless otherwise specified.

Premises:
Equity securities are purchased for $900 cash.
Equity securities with a cost of $600 have a market value of $350 when the financial statements are produced.
Equity securities with a cost of $12,000 have a market value of $14,000 when the financial statements are produced.
Equity securities with an original cost of $3,000 and a balance sheet value of $700 are sold for $800.
Equity securities with an original cost of $4,000 and a balance sheet value of $4,500 are sold for $4,300.
Equity securities with an original cost of $9,000 and a balance sheet value of $7,800 are sold for $7,800.
Equity securities with an original cost of $4,000 and a balance sheet value of $4,500 are sold for $4,500.
Securities for which the equity method is used, with a cost of $7,000, have a market value of $5,200 when the financial statements are produced.
Securities for which the equity method is used, with a cost of $7,000, have a market value of $7,200 when the financial statements are produced.
Responses:
+ A and + L
+ A and + SE (on income statement)
– A and – L
– A and – SE (on income statement)
No change in total A, L, or SE

Correct Answer:

Equity securities are purchased for $900 cash.
Equity securities with a cost of $600 have a market value of $350 when the financial statements are produced.
Equity securities with a cost of $12,000 have a market value of $14,000 when the financial statements are produced.
Equity securities with an original cost of $3,000 and a balance sheet value of $700 are sold for $800.
Equity securities with an original cost of $4,000 and a balance sheet value of $4,500 are sold for $4,300.
Equity securities with an original cost of $9,000 and a balance sheet value of $7,800 are sold for $7,800.
Equity securities with an original cost of $4,000 and a balance sheet value of $4,500 are sold for $4,500.
Securities for which the equity method is used, with a cost of $7,000, have a market value of $5,200 when the financial statements are produced.
Securities for which the equity method is used, with a cost of $7,000, have a market value of $7,200 when the financial statements are produced.
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