Question : 119.Madison Corporation purchased 40% of Jay Corporation for $125,000 January : 1236477

119.Madison Corporation purchased 40% of Jay Corporation for $125,000 on January 1. On June 20 of the same year, Jay Corporation declared total cash dividends of $30,000. At year-end, Jay Corporation reported net income of $150,000. The balance in Madison Corporation’s Long-Term Investment-Jay Corporation account as of December 31 should be:   

A.$77,000.

B.$125,000.

C.$173,000.

D.$197,000.

E.$370,000.

120.Pravis Corporation owns 30% of Kuster Corporation. Pravis Corporation received $9,000 in cash dividends from Kuster Corporation. The entry to record receipt of these dividends is:   

A.Debit Cash, $9,000; credit Long-Term Investments, $9,000.

B.Debt Long-Term Investment, $9,000; credit Cash, $9000.

C.Debit Cash, $9,000; credit Interest Revenue, $9,000.

D.Debit Unrealized Gain-Equity, $9,000; credit Cash, $9,000.

E.Debit Cash, $9,000; credit Dividend Revenue, $9,000.

121.On January 4, Year 1, Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker’s fee of $1,000. Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $72,000 and $67,000 for Year 1 and Year 2, respectively. The January 12, Year 3, entry to record Barber’s sale of 3,000 shares of Convell Company stock, which represents 60% of Barber’s total investment, for $39,000 cash should be:    

A.Debit Cash $39,000; debit Loss on Sale of Investment $8,200; credit Long-Term Investments $47,280.

B.Debit Cash $39,000; debit Loss on Sale of Investment $8,880; credit Long-Term Investments $47,880.

C.Debit Cash $39,000; credit Gain on Sale of Investment $2,700; credit Long-Term Investments $36,300.

D.Debit Cash $39,000; credit Gain on Sale of Investment $8,750; credit Long-Term Investments $30,250.

E.Debit Cash $39,000; debit Loss on Sale of Investment $21,500; credit Long-Term Investments $60,500.

122.On January 4, Year 1, Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker’s fee of $1,000. Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $72,000 and $67,000 for Year 1 and Year 2, respectively. What is the book value of Barber’s investment in Convell at the end of Year 2?    

A.$60,500.

B.$79,800.

C.$52,000.

D.$88,300.

E.$87,300.

123.A U.S. company makes a sale to a foreign customer receivable in 30 days in the customer’s currency. The sale would be recorded by the U.S. company on the date:   

A.Of sale using a projected estimate of the U.S. dollar value at payment date.

B.Of sale using a 30-day average U.S. dollar value.

C.Of sale using the current dollar value.

D.Of sale using the foreign currency value.

E.When payment is received.

124.When a U.S. company makes a credit sale to an international customer and the sale terms are for payment in a foreign currency, the foreign exchange rate used to record the sale is the exchange rate:   

A.Thirty days from the date of sale.

B.At the end of the seller’s fiscal year.

C.At the end of the buyer’s fiscal year.

D.On the date final payment is made.

E.On the date of the sale.

125.On June 18, Wyman Company (a U.S. Company) sold merchandise to the Nielsen Company of Denmark for €60,000 (Euros), with a payment due in 60 days. If the exchange rate was $1.35 per euro on the date of sale and $1.14 per euro on the date of payment, Johnson Company should recognize a foreign exchange gain or loss in the amount of:    

A.$60,000 gain.

B.$60,000 loss.

C.$68,400 loss.

D.$12,600 gain.

E.$12,600 loss.

126.On November 12, Higgins, Inc., a U.S. Company, sold merchandise on credit to Kagomeof Japan at a price of 1,500,000 yen. The exchange rate was $0.00837 per yen on the date of sale. On December 31, when Higgins prepared its financial statements, the exchange rate was $0.00843. Kagomepaid in full on January 12, when the exchange rate was $0.00861. On December 31, Higgins should prepare the following journal entry:    

A.Debit Sales $90; credit Foreign Exchange Gain $90.

B.Debit Foreign Exchange Loss $90; credit Sales $90.

C.Debit Accounts Receivable-Kagome $90; credit Foreign Exchange Gain $90.

D.Debit Foreign Exchange Loss $90; Accounts Receivable-Kagome $90.

E.No journal entry is required until the amount is collected.

127.On November 12, Higgins, Inc., a U.S. Company, sold merchandise on credit to Kagome of Japan at a price of 1,500,000 yen. The exchange rate was $0.00837 on the date of sale. On December 31, when Higgins prepared its financial statements, the exchange rate was $0.00843. Kagome paid in full on January 12, when the exchange rate was $0.00861. On January 12, Higgins should prepare the following journal entry:    

A.Debit Cash $12,915; credit Accounts Receivable-Kagome $12,555; credit Foreign Exchange Gain $360.

B.Debit Cash $12,555; debit Foreign Exchange Loss $360; credit Accounts Receivable-Kagome $12,915.

C.Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $90.

D.Debit Cash $12,645; debit Foreign Exchange Loss $90; credit Accounts Receivable-Kagome $12,915.

E.Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $270.

128.All of the following statements regarding accounting for noninfluential securities under U.S. GAAP and IFRS are true except:    

A.Trading securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.

B.Trading securities are accounted for using fair values with unrealized gains and losses reported in net income.

C.Available-for-sale securities are accounted for using fair values with unrealized gains and losses reported in other comprehensive income.

D.Held-to-maturity securities are accounted for using amortized cost.

E.Both systems examine held-to-maturity securities for impairment.