Question 1

On January 1, 2014, Tri-State Company purchased at face value, a $1,000 7%, bond that pays interest annually on January 1. Tri-State Company has a calendar year end. The entry for the receipt of interest on January 1, 2015 is

Accepted Answer

The answer of On January 1, 2014, Tri-State Company purchased...

Question 2

All of the following factors would be signs of an investor's significant influence over an investee except

Accepted Answer

Immaterial transactions between the investor and investee would not necessarily indicate significant influence. The other factors listed (representation on the board of directors, participation in policy-making process, and dispersed ownership of common stock) would suggest that the investor has significant influence.

Question 3

On January 1, 2014, Chic Corp. paid $1,200,000 for 100,000 shares of Toto Company's common stock, which represents 40% of Toto's outstanding common stock. Toto reported income of $300,000 and paid cash dividends of $80,000 during 2014 Chic should report the investment in Toto Company on its December 31, 2014, balance sheet at

Accepted Answer

The answer of On January 1, 2014, Chic Corp. paid...

Question 4

On January 1, U.K. Enterprise purchased as an investment a $1,000, 6% bond for $1,000. The bond pays interest on January 1 and July 1. The bond is sold on September 1 for $1,100 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold?

Accepted Answer

The answer of On January 1, U.K. Enterprise purchased as...

Question 5

On January 1, Belvedere Company purchased as an investment a $1,000, 7% bond for $1,000. The bond pays interest on January 1 and July 1. What is the entry to record the interest accrual on December 31?

Accepted Answer

The answer of On January 1, Belvedere Company purchased as...

Question 6

Buford Industries owns 45% of Appalachian Company. For the current year, Appalachian reports net income of $250,000 and declares and pays a $70,000 cash dividend. Which of the following correctly presents the journal entries to record Buford's equity in Appalachian net income and the receipt of dividends from Appalachian?

Accepted Answer

The answer of Buford Industries owns 45% of Appalachian Company....

Question 7

Charleston Co. purchased 60, 6% APS Company bonds for $60,000 cash plus brokerage fees of $500. Interest is payable semiannually on July 1 and January 1. The entry to record the December 31 interest accrual would include a

Accepted Answer

The interest for 6 months on $60,000 at 6% is $1,800. Since the interest is payable semiannually, the entry on December 31 would include a debit to Interest Receivable for $1,800 to recognize the interest earned but not yet received.

Question 8

If a debt investment is sold, the investment account is

Accepted Answer

The answer of If a debt investment is sold, the...

Question 9

On January 1, Waverly Company purchased as an investment a $1,000, 6% bond for $1,000. The bond pays interest on January 1 and July 1. What is the entry to record the interest accrual on December 31?

Accepted Answer

The answer of On January 1, Waverly Company purchased as...

Question 10

McComb Inc. earns $900,000 and pays cash dividends for $300,000 during 2014. SFXl Corporation owns 70,000 of the 210,000 outstanding shares of McComb. How much revenue from investment should Cornwell report in 2014?

Accepted Answer

The answer of McComb Inc. earns $900,000 and pays cash...

Question 11

Charleston Co. purchased 60, 6% APS Company bonds for $60,000 cash. Interest is payable semiannually on July 1 and January 1. The entry to record the July 1 semiannual interest payment would include a

Accepted Answer

The semiannual interest payment is calculated as 60 bonds x $1,000 (face value per bond) x 6% annual interest rate / 2 = $1,800. Therefore, the entry would include a credit to Interest Revenue for $1,800.

Question 12

McComb Inc. earns $900,000 and pays cash dividends for $300,000 during 2014. SFX Corporation owns 70,000 of the 210,000 outstanding shares of McComb. What amount should SFX show in the investment account at December 31, 2014 if the beginning of the year balance in the account was $100,000?

Accepted Answer

The answer of McComb Inc. earns $900,000 and pays cash...

Question 13

On August 1, Basil Company buys 2,000 shares of Zingo common stock for $61,500 cash. On December 1, the stock investments are sold for $76,000 in cash. Which of the following are the correct journal entries of record for the purchase and sale of the common stock?

Accepted Answer

The answer of On August 1, Basil Company buys 2,000...

Question 14

Vangaurd Co. purchased 50, 6% McLaughlin Company bonds for $50,000 cash. Interest is payable semiannually on July 1 and January 1. The entry to record the purchase would include debit to

Accepted Answer

The purchase of bonds is recorded by debiting the Debt Investments account for the cost of the bonds, which is $50,000 in this case.

Question 15

On January 1, Connid Company purchased as an investment a $1,000, 8% bond for $1,000. The bond pays interest on January 1 and July 1. What is the entry to record the interest payment on July 1?

Accepted Answer

The answer of On January 1, Connid Company purchased as...

Question 16

On January 1, Bay View Company purchased as an investment a $1,000, 6% bond for $1,000. The bond pays interest on January 1 and July 1. The bond is sold on September 1 for $1,050 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold?

Accepted Answer

The answer of On January 1, Bay View Company purchased...

Question 17

Porter Brothers Company purchased debt investment for $80,000 on January 1, 2014. On July 1, 2014, Jamison received cash interest of $2,905. Assuming no interest has been accrued, which of the following correctly presents the journals entries for the purchase and the receipt of interest?

Accepted Answer

The answer of Porter Brothers Company purchased debt investment for...

Question 18

Cedar Co. purchased 120, 6% LKN Company bonds for $120,000 cash. Interest is payable semiannually on July 1 and January 1. If 60 of the securities are sold July 1 for $61,500 the entry would include a credit to Gain on Sale of Debt Investments of

Accepted Answer

The answer of Cedar Co. purchased 120, 6% LKN Company...

Question 19

On January 1, Vega Company purchased as an investment a $1,000, 8% bond for $1,000. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,080 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold?

Accepted Answer

The answer of On January 1, Vega Company purchased as...

Question 20

Which of the following is not a true statement about the accounting for long-term debt investments?

Accepted Answer

The answer of Which of the following is not a...

Quiz 14: Understanding Investments and Acquisitions in Accounting