Exam 15: Specimen Financial Statements: Pepsico, Inc

McComb Inc. earns $1,350,000 and pays cash dividends for $450,000 during 2017. 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, 2017 if the beginning of the year balance in the account was $150,000?

Why do corporations generally invest in debt or equity securities?

Which is not a strategic reason to invest?

Corporations purchase investments in debt or equity securities generally for one of two reasons.

CGS Corporation makes an investment in 300 shares of Bama Company's common stock. The stock is purchased for $53 a share. The entry for the purchase is:

The accounting for short-term debt investments and for long-term debt investments is similar.

In accounting for debit investments, companies make entries for each of the following except:

On January 1, 2017, Tri-State Company purchased at face value, a $1,000, 5%, 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, 2018 is

Bing Company owns 30% interest in the stock of Yeti Corporation. During the year, Yeti pays $75,000 in dividends to Bing, and reports $400,000 in net income. Bing Company's investment in Yeti will increase Bing net income by

If the equity method is being used, the Revenue from Investment in Stock account is

Gulf Coast Corporation makes an investment in 200 shares of Eta Company's common stock. The stock is purchased for $52 a share. The entry for the purchase is

Trading securities are valued on the balance sheet at their fair value.

Under the equity method the investor records a proportionate share of the investee's income in the year when it is earned.

On January 1, Connid Company purchased as an investment a $1,000, 8% bond for $1,000. The bond pays interest on January 1. What is the entry to record the interest accrual on December 31?

A purchase of common stock of Blue Wave Corporation for $29,000 was sold three months later for $30,000. The entry to record the sale would include a

If the cost method is used to account for an investment in common stock

What are the reasons that corporations invest in securities?

Charleston Co. purchased 60, 6% APS Company bonds on January 1, 2017 for $60,000 cash. Interest is payable annually on January 1. The entry to record the January 1, 2018 annual interest payment would include a

If a debt investment is sold, the investment account is

Consolidated financial statements should be prepared only when a subsidiary company has a controlling interest in the parent company.