Maurice Corporation invested $100,000 to acquire 20,000 shares of Delta Technologies Inc.on March 1,2015.Delta pays a cash dividend of $0.25 per share on July 2,2015.The investment is classified as an available-for-sale investment.Based on the information provided,which of the following is true of the balance sheet as of July 2,2015?

Question

Quizplus · Accepted Answer

The investment is classified as an available-for-sale investment, which means that any unrealized gains or losses on the investment are reported in other comprehensive income and not in the income statement. Therefore, the balance sheet will not be affected by the dividend payment. However, the equity section of the balance sheet will increase by the amount of the dividend received, which is $5,000 (20,000 shares x $0.25 per share).

Maurice Corporation Invested $100,000 to Acquire 20,000 Shares of Delta