Vans purchased 40,000 shares of Skechers common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:
A)Debit to Long-Term Investments for $92,800.
B)Debit to Long-Term Investments for $232,000.
C)Credit to Long-Term Investments for $92,800.
D)Credit to Long-Term Investments for $232,000.
E)Debit to Long-Term Investment for $40,000.

Question

Quizplus · Accepted Answer

The purchase of 40% of the outstanding stock for $232,000 represents a significant long-term investment for Vans. Therefore, the entry to record the transaction should include a debit to Long-Term Investments for the entire amount of the investment, which is $232,000.

Vans Purchased 40,000 Shares of Skechers Common Stock for $232,000