Question 1

Trading securities are valued on the balance sheet at market value.

Accepted Answer

A) True 
 B)False

Question 2

Cupcake Company had the following transactions pertaining to its temporary stock investments.
Jan. 1 Purchased 600 shares of La Crema Company stock for $7,050 cash .
June 1 Received cash dividends of $0.40 per share on the La Crema Company stock.
Sept. 15 Sold 300 shares of the La Crema Company stock for $3,400 cash.
Instructions
Journalize the transactions.

Accepted Answer

The answer of Cupcake Company had the following transactions pertaining...

Question 3

Unrealized gains and losses are recognized on trading securities.

Accepted Answer

A) True 
 B)False

Question 4

Mega Company receives net proceeds of $73,000 on the sale of stock investments that cost $79,000. This transaction will result in reporting in the income statement a

Accepted Answer

A)  loss of $6,000 under "Other expenses and losses." 
B)  loss of $6,000 under "Operating expenses." 
C)  gain of $6,000 under "Other revenues and gains." 
D)  gain of $6,000 under "Operating revenues." 
A)  loss of $6,000 under "Other expenses and losses." 
B)  loss of $6,000 under "Operating expenses." 
C)  gain of $6,000 under "Other revenues and gains." 
D)  gain of $6,000 under "Operating revenues."

Question 5

Barcelona Company owns 40% interest in the stock of ABX Corporation. During the year, ABX pays $20,000 in dividends to Barcelona, and reports $150,000 in net income. Barcelona Company's investment in ABX will increase Barcelona net income by

Accepted Answer

A)  $52,000. 
B)  $60,000. 
C)  $52,000 
D)  $8,000. 
A)  $52,000. 
B)  $60,000. 
C)  $52,000 
D)  $8,000.

Question 6

For accounting purposes, the method used to account for investments in common stock is determined by

Accepted Answer

A)  the amount paid for the stock by the investor. 
B)  the extent of an investor's influence over the operating and financial affairs of the investee. 
C)  whether the stock has paid dividends in past years. 
D)  whether the acquisition of the stock by the investor was "friendly" or "hostile." 
A)  the amount paid for the stock by the investor. 
B)  the extent of an investor's influence over the operating and financial affairs of the investee. 
C)  whether the stock has paid dividends in past years. 
D)  whether the acquisition of the stock by the investor was "friendly" or "hostile."

Question 7

If an investor owns between 20% and 50% of an investee's common stock, it is presumed that the investor has significant influence on the investee.

Accepted Answer

A) True 
 B)False

Question 8

Common Ground Corporation issued $8,000,000, 10-year bonds and agreed to make annual sinking fund deposits of $620,000. The deposits are made at the end of each year into an account paying 6% annual interest. Common Ground has the following values related to the time value of money and compounded interest decisions.   To the closest dollar, what amount will be in the sinking fund at the end of 10 years?

Accepted Answer

A)  $4,467,120 
B)  $4,563,256 
C)  $8,172,090 
D)  $12,800,000 
A)  $4,467,120 
B)  $4,563,256 
C)  $8,172,090 
D)  $12,800,000

Question 9

When determining the proceeds received when issuing a bond, the factor applied to the amount of the interest payments is determined from the table of the

Accepted Answer

A)  present value of 1. 
B)  present value of an annuity of 1. 
C)  future value of 1. 
D)  future value of an annuity of 1. 
A)  present value of 1. 
B)  present value of an annuity of 1. 
C)  future value of 1. 
D)  future value of an annuity of 1.

Question 10

Hardin Park Company had these transactions pertaining to stock investments Feb. 1 Purchased 2,500 shares of Raley Company (10%) for $44,500 cash.
June 1 Received cash dividends of $1 per share on Raley stock.
Oct) 1 Sold 1,000 shares of Raley stock for $19,500.
Dec) 1 Received cash dividends of $2 per share on Raley stock.
The entry to record the sale of the stock would include a

Accepted Answer

A)  debit to Cash for $17,800. 
B)  credit to Gain on Sale of Stock Investments for $680. 
C)  debit to Stock Investment for $17,800. 
D)  credit to Gain on Sale of Stock Investments of $1,700. 
A)  debit to Cash for $17,800. 
B)  credit to Gain on Sale of Stock Investments for $680. 
C)  debit to Stock Investment for $17,800. 
D)  credit to Gain on Sale of Stock Investments of $1,700.

Question 11

Compound interest is computed on the principal and any interest earned that has not been withdrawn.

Accepted Answer

A) True 
 B)False

Question 12

Santos Corporation has the following trading portfolio of stock investments as of December 31, 2013.   On January 22, 2014, Santos Corporation sold security C for $30,000.
Instructions
(a) Prepare the adjusting entry for Santos Corporation on December 31, 2013 to report the portfolio at fair value.
(b) Indicate the balance sheet and income statement presentation of the fair value data for the Santos Corporation at December 31, 2013.
(c) Prepare the journal entry for the 2014 sale.

Accepted Answer

@#IMG-DLM& (b) On the balance sheet, the short-ter

Question 13

On January 1, 2014, the Express Corporation purchased 30% of the common stock outstanding of the Bangor Corporation for $200,000. During 2014, the Bangor Corporation reported net income of $80,000 and paid cash dividends of $20,000. The balance of the Stock Investments-Bangor account on the books of Express Corporation at December 31, 2014, is

Accepted Answer

A)  $200,000. 
B)  $220,000. 
C)  $280,000. 
D)  $218,000. 
A)  $200,000. 
B)  $220,000. 
C)  $280,000. 
D)  $218,000.

Question 14

An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 15

Jambon Company owns 10% interest in the stock of Fanth Corporation. During the year, Fanth pays $8,000 in dividends to Jambon, and reports $200,000 in net income. Jambon Company's investment in Fanth will increase Jambon net income by

Accepted Answer

A)  $20,000. 
B)  $2,000. 
C)  $8,000. 
D)  $12,000. 
A)  $20,000. 
B)  $2,000. 
C)  $8,000. 
D)  $12,000.

Question 16

Corporations invest in other companies for all of the following reasons except to

Accepted Answer

A)  house excess cash until needed. 
B)  generate earnings. 
C)  meet strategic goals. 
D)  increase trading of the other companies' stock. 
A)  house excess cash until needed. 
B)  generate earnings. 
C)  meet strategic goals. 
D)  increase trading of the other companies' stock.

Question 17

The difference between the amount borrowed (or invested) and the amount repaid (or collected) is commonly known as

Accepted Answer

A)  simple interest. 
B)  an annuity. 
C)  interest 
D)  present value. 
A)  simple interest. 
B)  an annuity. 
C)  interest 
D)  present value.

Question 18

On January 1, 2014, Orleans industries acquired a 15% interest in Florida Corporation through the purchase of 12,000 shares of Florida Corporation common stock for $320,000. During 2014, Florida Corp. paid $80,000 in dividends and reported a net loss of $100,000. Orleans is able to exert significant influence on Florida. However, Orleans mistakenly records these transactions using the cost method rather than the equity method of accounting. Which of the following would show the correct presentation for Orlean's investment using the equity method?

Accepted Answer

The answer of On January 1, 2014, Orleans industries acquired...

Question 19

Buford Industries owns 45% of Appalachian Company. For the current year, Appalachian reports net income of $250,000 and declares and pays a $70,000 cash dividend. Which of the following correctly presents the journal entries to record Buford's equity in Appalachian net income and the receipt of dividends from Appalachian?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 20

Porter Brothers Company purchased debt investment for $80,000 on January 1, 2014. On July 1, 2014, Jamison received cash interest of $2,905. Assuming no interest has been accrued, which of the following correctly presents the journals entries for the purchase and the receipt of interest?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Trading securities are valued on the balance sheet at market value.

Unrealized gains and losses are recognized on trading securities.

Mega Company receives net proceeds of $73,000 on the sale of stock investments that cost $79,000. This transaction will result in reporting in the income statement a

Barcelona Company owns 40% interest in the stock of ABX Corporation. During the year, ABX pays $20,000 in dividends to Barcelona, and reports $150,000 in net income. Barcelona Company's investment in ABX will increase Barcelona net income by

For accounting purposes, the method used to account for investments in common stock is determined by

If an investor owns between 20% and 50% of an investee's common stock, it is presumed that the investor has significant influence on the investee.

When determining the proceeds received when issuing a bond, the factor applied to the amount of the interest payments is determined from the table of the

Compound interest is computed on the principal and any interest earned that has not been withdrawn.

An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.

Jambon Company owns 10% interest in the stock of Fanth Corporation. During the year, Fanth pays $8,000 in dividends to Jambon, and reports $200,000 in net income. Jambon Company's investment in Fanth will increase Jambon net income by

Corporations invest in other companies for all of the following reasons except to

The difference between the amount borrowed (or invested) and the amount repaid (or collected) is commonly known as

Porter Brothers Company purchased debt investment for $80,000 on January 1, 2014. On July 1, 2014, Jamison received cash interest of $2,905. Assuming no interest has been accrued, which of the following correctly presents the journals entries for the purchase and the receipt of interest?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

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Exam 14: Time Value of Money

Trading securities are valued on the balance sheet at market value.

Unrealized gains and losses are recognized on trading securities.

Mega Company receives net proceeds of $73,000 on the sale of stock investments that cost $79,000. This transaction will result in reporting in the income statement a

Barcelona Company owns 40% interest in the stock of ABX Corporation. During the year, ABX pays $20,000 in dividends to Barcelona, and reports $150,000 in net income. Barcelona Company's investment in ABX will increase Barcelona net income by

For accounting purposes, the method used to account for investments in common stock is determined by

If an investor owns between 20% and 50% of an investee's common stock, it is presumed that the investor has significant influence on the investee.

When determining the proceeds received when issuing a bond, the factor applied to the amount of the interest payments is determined from the table of the

Compound interest is computed on the principal and any interest earned that has not been withdrawn.

An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.

Jambon Company owns 10% interest in the stock of Fanth Corporation. During the year, Fanth pays $8,000 in dividends to Jambon, and reports $200,000 in net income. Jambon Company's investment in Fanth will increase Jambon net income by

Corporations invest in other companies for all of the following reasons except to

The difference between the amount borrowed (or invested) and the amount repaid (or collected) is commonly known as

Porter Brothers Company purchased debt investment for $80,000 on January 1, 2014. On July 1, 2014, Jamison received cash interest of $2,905. Assuming no interest has been accrued, which of the following correctly presents the journals entries for the purchase and the receipt of interest?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

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