you can use A, B, C, or D to answer Question 7 On April 1, 2011, Albert Company purchased $50,000 of

you can use A, B, C, or D to answer

Question 7

On April 1, 2011, Albert Company purchased $50,000 of Tetter CompanyA????1s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Albert received its first semiannual interest. On February 1, 2012, Albert sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Albert will record on April 1, 2011 for the purchase of the bonds will include:

  a credit to Interest Payable for $2,000.
  a debit to Investments – Tetter Company for $52,000.
  a debit for Cash of $50,000.
  a debit to Investments – Tetter Company for $50,000.

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Question 81 pts

When the cost method is used to account for an investment, the carrying value of the investment is affected by

  the dividend distributions of the investee.
  the periodic net income of the investee.
  the earnings and dividend distributions of the investee.
  neither the earnings nor the dividends of the investee.

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Question 91 pts

Which of the following would be considered an A????1Other Comprehensive IncomeA????1 item?

  net income.
  extraordinary loss related to flood.
  gain on disposal of discontinued operations.
  unrealized loss on available-for-sale securities.

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Question 101 pts

The method of accounting for investments in equity securities in which the investor records its share of periodic net income of the investee is the

  cost method
  market method
  income method
  equity method

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Question 111 pts

All of the following are disadvantages of fair value use except:

  fair values may not be readily obtainable.
  fair values may cause more fluctuations as change occurs from period to period.
  comparability between companies may be impacted by different fair value measurement.
  fair values can only be used on balance sheet accounts.

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Question 121 ptsSkip to question text.

On February 12, Addison, Inc. purchased 6,000 shares of Lucas Company at $22 per share plus a $240 brokerage fee. On August 22, Lucas paid a $0.42 dividend per share. On November 10, 4,000 shares of Lucas stock were sold for $28 per share less a $160 brokerage fee. The journal entry for the sale would include:

  a debit to Cash for $111,840
  a credit to Investments for $112,000
  a credit to Loss on Sale for $23,680
  a debit to Cash for $112,000

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Question 131 pts

Held-to-Maturity securities

  are reported at their fair market value on the balance sheet date
  include both stocks and bonds
  are primarily purchased to earn interest revenue
  all of the above

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Question 141 pts

Long-term investments are held for all of the listed reasons below except

  to earn the interest or dividend income
  for its long-term gain potential
  to influence over another business entity
  to meet current cash needs

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Question 151 pts

All of the following are factors contributing to the trend for regulators to adopt accounting principles using fair value concepts except:

  a greater percentage of total assets existing as receivables and securities.
  pressure on regulators to adopt an international set of accounting principles and standards.
  hybrid measurement methods within GAAP that conflict with each other.
  the ease of applying market values to assets and liabilities.

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Question 161 ptsSkip to question text.

On May 1, 2014, Stanton Company purchased $60,000 of Harris CompanyA????1s 12% bonds at 100 plus accrued interest of $2,400. On June 30, 2014, Stanton received its first semiannual interest. On February 1, 2015, Stanton sold $50,000 of the bonds at 103 plus accrued interest.

What are the total proceeds from the February 1, 2015 sale?

  $52,400
  $51,500
  $50,000
  $52,000

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Question 171 pts

The account Valuation Allowance for Trading Securities is found on the:

  Income statement as Other Revenue (Expenses)
  Balance sheet as an adjustment to the asset account
  Balance sheet as an adjustment to Stockholders' Equity
  Statement of Retained Earnings

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Question 181 pts

A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share. The market value of the stock is $16 per share. The companyA????1s dividend yield is:

  2.5%
  400%
  16%
  40%

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Question 191 pts

When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)

  prior period adjustment
  operating income and losses
  paid-in capital addition
  gain or loss

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Question 201 pts

Edison Corporation paid a dividend of $10 per share on its $100 par preferred stock and $4 per share on its $20 par common stock. The market value of the common stock is $80 per share. EdisonA????1s dividend yield is:

  5%
  10%
  25%
  20%

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Question 211 pts

Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds at $104,500 plus $500 in accrued interest. The journal entry to record the sale of the bonds would be:

  Debit: Cash $105,000; Credit: Investment in Bonds $104,500 and Interest Revenue $500
  Debit: Cash $105,000; Credit: Investment in Bonds $100,000 and Gain on Sale of Investments $5,000
  Debit: Cash $104,500 and Interest Receivable $500; Credit: Investment in Bonds $100,000, Gain on Sale of Investments $4,500 and Interest Revenue $500
  Debit: Cash $105,000; Credit: Investment in Bonds $100,000; Gain on Sale of Investments $4,500 and Interest Revenue $500

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Question 221 ptsSkip to question text.

Yankton Company began the year without an investment portfolio. During the year they purchased investments classified as trading securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should show

  a loss of $2,000 on the income statement and net trading securities of $13,000 on the balance sheet
  no loss on the income statement and net trading securities of $13,000 on the balance sheet
  no loss on the income statement, net trading securities of $11,000 and an unrealized loss of $2,000 as a stockholdersA????1 equity adjustment on the balance sheet
  a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet

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Question 231 pts

The equity method of accounting for investments

  requires a year-end adjustment to revalue the stock to lower of cost or market
  requires the investment to be reported at its original cost
  requires the investment be increased by the reported net income of the investee
  requires the investment be increased by the dividends paid by the investee

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Question 241 pts

Companies may report comprehensive income on each of the statements below except

  income statement
  separate statement of comprehensive income
  statement of cash flows
  retained earnings statement

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Question 251 ptsSkip to question text.

Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Kennedy Company on March 1. The bonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds would include:

  Interest Receivable debit $2,000
  Investment in Bonds debit $202,000.
  Cash debit $200,000
  Interest Revenue credit $2,000.

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