Franklin Corporation invested $100,000 to acquire 20,000 shares of Hope Technologies, Inc. on March 1, 2018. Hope pays a cash dividend of $0.25 per share on July 2, 2019. The investment is classified as equity securities with no significant influence. Based on these two transactions, which of the following is true of the accounting equation as of July 2, 2019?

Question

Quizplus · Accepted Answer

Equity in the balance sheet will increase because the receipt of dividends from an investment classified as equity securities results in an increase in cash (an asset) without a corresponding decrease in another asset, thereby increasing equity through increased earnings.

Franklin Corporation Invested $100,000 to Acquire 20,000 Shares of Hope