1. Eck Corporation sells 250 shares of common stock being held as an investment. The shares were acquired six months ago at a cost of $25 a share. Eck sold the shares for $40 a share. The entry to record the sale isCash 10,000Gain on Sale of Stock Investments 3,750Stock Investments 6,250Stock Investments 10,000Cash 10,000Cash 10,000Stock Investments 10,000Cash 6,250Loss on Sale of Stock Investments 3,750Stock Investments 10,000Multiple Choice Question 452. On January 1, Talent Company purchased as a short-term investment a $1,000, 8% bond for $1,050. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold?Cash 1,200Debt Investments 1,200Cash 1,220Debt Investments 1,050Gain on Sale of Debt Investments 150Interest Revenue 20Cash 1,220Debt Investments 1,200Interest Revenue 20Cash 1,200Debt Investments 1,050Gain on Sale of Debt Investments 150Multiple Choice Question 1173. At the end of its first year, the trading securities portfolio consisted of the following common stocks.Cost Fair ValueAtrium Corporation $ 46,400 $ 50,000Barnes Inc. 60,000 55,800Cantor Corporation 80,000 76,000$186,400 $181,800In the following year, the Barnes common stock is sold for cash proceeds of $56,000. The gain or loss to be recognized on the sale is aloss of $4,000.gain of $1,200.gain of $200.loss of $4,200.Multiple Choice Question 404. At the time of acquisition of a debt investment,the Stock Investments account is debited when bonds are purchased.the Investment account is credited for its cost plus brokerage fees.no journal entry is required.the cost principle applies.Multiple Choice Question 795. The account, Stock Investments, isa general ledger control account.another name for Debt Investments.a subsidiary ledger account.a long-term liability account.Multiple Choice Question 596. Tan Company had these transactions pertaining to stock investments:Feb. 1 Purchased 3,000 shares of Norton Company (10%) for $48,800 cash plus brokerage fees of $1,400.June 1 Received cash dividends of $2 per share on Norton stock.Oct. 1 Sold 1,200 shares of Norton stock for $24,000 less brokerage fees of $600.The entry to record the purchase of the Norton stock would include acredit to Cash for $48,800.debit to Stock Investments for $48,800.debit to Stock Investments for $50,200.debit to Investment Expense for $1,400.Multiple Choice Question 947. Mission Inc. earns $450,000 and pays cash dividends of $150,000 during 2013. Cox Corporation owns 70,000 of the 210,000 outstanding shares of Mission.How much revenue from investment should Cox report in 2013?$150,000$200,000$50,000$100,000Multiple Choice Question 1388. Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or stock securities?The company may have excess cash.The company may invest for speculative reasons to increase the value in pension funds.The company may generate a significant portion of its earnings from investment income.The company may invest for the strategic reason of establishing a presence in a related industry.Multiple Choice Question 1159. The balance sheet presentation of an unrealized loss on a non-trading security is similar to the statement presentation oftreasury stock.discount on bonds payable.prepaid expenses.allowance for doubtful accounts.Multiple Choice Question 14210. A company that acquires less than 20% ownership interest in another company should account for the stock investment in that company usingthe significant method.the equity method.consolidated financial statements.the cost method.Multiple Choice Question 4111. Which of the following is not a true statement regarding short-term debt investments?Investments are frequently government or corporate bonds.The securities usually pay interest.This type of investment must be currently traded in the securities market.Debt investments are recorded at the price paid less brokerage fees.Multiple Choice Question 8112. Revenue is recognized when cash dividends are received underthe cost method.the equity method.the controlling interest method.both the cost and equity methods.Multiple Choice Question 14513. An unrealized loss on non-trading securities isclosed-out at the end of the accounting period.deducted from the cost of the investment.reported as a separate component of stockholders’ equity.reported under Other Expenses and Losses in the income statement.Multiple Choice Question 9314. Mission Inc. earns $600,000 and pays cash dividends of $150,000 during 2013. Cox Corporation owns 70,000 of the 210,000 outstanding shares of Mission.What amount should Cox show in the investment account at December 31, 2013 if the beginning of the year balance in the account was $40,000?$190,000$200,000$175,000$180,000Multiple Choice Question 10815. The contra-account, Fair value Adjustment, is also called a(n)valuation account.offset account.opposite account.adjustment account.
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