Question :
100.Use this information to answer the following question. These facts : 1244279
100.Use this information to answer the following question. These facts concern the long-term stock investments of Alpha Corporation:
June 1, 20×7
Paid cash for the following long-term investment: 5,000 shares Carey Corporation common stock (representing 5 percent of outstanding stock) at $40 per share; 3,000 shares Burns Corporation common stock (representing 3 percent of outstanding stock) at $24 per share.
Dec. 31, 20×7
Quoted market prices at year end: Carey common stock, $35; Burns common stock, $27.
April 1, 20×8
A change in policy required the sale of 1,000 shares of Carey Corporation common stock at $38.
July 1, 20×8
Received a cash dividend from Burns Corporation equal to $0.30 per share.
Dec. 31, 20×8
Quoted market prices at year end: Carey common stock, $39; Burns common stock, $22.
The entry to record the purchase of the Carey Corporation common stock would include a
a.
credit to the Cash account for $20,000.
b.
debit to the Long-Term Investments accounts for $200,000.
c.
debit to the Long-Term Investments accounts for $20,000.
d.
debit to the Cash account for $200,000.
101.Use this information to answer the following question. These facts concern the long-term stock investments of Alpha Corporation:
June 1, 20×7
Paid cash for the following long-term investment: 5,000 shares Carey Corporation common stock (representing 5 percent of outstanding stock) at $40 per share; 3,000 shares Burns Corporation common stock (representing 3 percent of outstanding stock) at $24 per share.
Dec. 31, 20×7
Quoted market prices at year end: Carey common stock, $35; Burns common stock, $27.
April 1, 20×8
A change in policy required the sale of 1,000 shares of Carey Corporation common stock at $38.
July 1, 20×8
Received a cash dividend from Burns Corporation equal to $0.30 per share.
Dec. 31, 20×8
Quoted market prices at year end: Carey common stock, $39; Burns common stock, $22.
The entry to set up the Allowance to Adjust Long-Term Investments to Market in 20×7 for both stocks would include a
a.
credit to the Allowance to Adjust Long-Term Investments to Market account for $16,000.
b.
credit to the Realized Loss account for $16,000.
c.
debit to the Allowance to Adjust Long-Term Investments to Market account for $16,000.
d.
debit to the Realized Loss account for $16,000.
102.Use this information to answer the following question. These facts concern the long-term stock investments of Alpha Corporation:
June 1, 20×7
Paid cash for the following long-term investment: 5,000 shares Carey Corporation common stock (representing 5 percent of outstanding stock) at $40 per share; 3,000 shares Burns Corporation common stock (representing 3 percent of outstanding stock) at $24 per share.
Dec. 31, 20×7
Quoted market prices at year end: Carey common stock, $35; Burns common stock, $27.
April 1, 20×8
A change in policy required the sale of 1,000 shares of Carey Corporation common stock at $38.
July 1, 20×8
Received a cash dividend from Burns Corporation equal to $0.30 per share.
Dec. 31, 20×8
Quoted market prices at year end: Carey common stock, $39; Burns common stock, $22.
The entry to record the sale of 1,000 shares of Carey Corporation common stock would include a
a.
debit to the Allowance to Adjust Long-Term Investments to Market account for $38,000.
b.
credit to the Cash account for $38,000.
c.
debit to the Cash account for $38,000.
d.
credit to the Allowance to Adjust Long-Term Investments to Market account for $38,000.
103.Use this information to answer the following question. These facts concern the long-term stock investments of Alpha Corporation:
June 1, 20×7
Paid cash for the following long-term investment: 5,000 shares Carey Corporation common stock (representing 5 percent of outstanding stock) at $40 per share; 3,000 shares Burns Corporation common stock (representing 3 percent of outstanding stock) at $24 per share.
Dec. 31, 20×7
Quoted market prices at year end: Carey common stock, $35; Burns common stock, $27.
April 1, 20×8
A change in policy required the sale of 1,000 shares of Carey Corporation common stock at $38.
July 1, 20×8
Received a cash dividend from Burns Corporation equal to $0.30 per share.
Dec. 31, 20×8
Quoted market prices at year end: Carey common stock, $39; Burns common stock, $22.
The entry to record the receipt of the cash dividend from Burns Corporation would include a
a.
credit to the Investment in Burns Corporation account for $900.
b.
debit to the Investment in Burns Corporation account for $900.
c.
credit to the Dividend Income account for $900.
d.
debit to the Dividend Income account for $900.
104.Use this information to answer the following question. These facts concern the long-term stock investments of Alpha Corporation:
June 1, 20×7
Paid cash for the following long-term investment: 5,000 shares Carey Corporation common stock (representing 5 percent of outstanding stock) at $40 per share; 3,000 shares Burns Corporation common stock (representing 3 percent of outstanding stock) at $24 per share.
Dec. 31, 20×7
Quoted market prices at year end: Carey common stock, $35; Burns common stock, $27.
April 1, 20×8
A change in policy required the sale of 1,000 shares of Carey Corporation common stock at $38.
July 1, 20×8
Received a cash dividend from Burns Corporation equal to $0.30 per share.
Dec. 31, 20×8
Quoted market prices at year end: Carey common stock, $39; Burns common stock, $22.
The entry to adjust the Allowance to Adjust Long-Term Investments to Market account in 20×8 would include a
a.
debit to the Allowance to Adjust Long-Term Investments to Market account for $10,000.
b.
credit to the Allowance to Adjust Long-Term Investments to Market account for $6,000.
c.
debit to the Allowance to Adjust Long-Term Investments to Market account for $6,000.
d.
debit to the Unrealized Loss on Long-Term Investments account for $10,000.
105.Hauser Corporation holds 300 shares of Marlow Corporation common stock as its sole long-term investment. Hauser does not have significant influence or control over Marlow. The stock was purchased during 20×7 at a price of $60 per share. On December 31, 20×7, the market price of Marlow’s stock was $54 per share. On December 31, 20×8, the market price of Marlow’s stock was $68 per share. What should be reported as the carrying value of the investment on Hauser’s December 31, 20×7, and December 31, 20×8, balance sheets, respectively?
a.
16,200; 20,400
b.
16,200; 18,000
c.
18,000; 18,000
d.
16,200; 16,200
106.Morse Company often invests in the stock of other companies for long-term purposes. None of the stocks currently held by Morse qualify for use of the equity method. The following amounts relate to Morse’s long-term portfolio of marketable equity securities.
Dec. 31, 20×7
Dec. 31, 20×8
Total cost
$280,000
$330,000
Total market
230,000
292,000
Based on the above information, the adjusting entry on December 31, 20×8, will include a
a.
debit to Allowance to Adjust Long-Term Investments to Market for $12,000.
b.
credit to Allowance to Adjust Long-Term Investments to Market for $38,000.
c.
credit to Allowance to Adjust Long-Term Investments to Market for $12,000.
d.
debit to Allowance to Adjust Long-Term Investments to Market for $38,000.
107.Orlov Corporation purchased 8,000 shares of Matsey Corporation common stock for $40 per share on January 1, 20×7. Matsey reported net income of $120,000 for 20×7 and paid dividends of $57,000 during 20×7. As of December 31, 20×7, the market value of Matsey Corporation common stock was $40 per share. Assuming the shares owned by Orlov represent 10 percent of the total outstanding stock of Matsey, Orlov Corporation should report income from this investment for 20×7 of
a.
$12,000.
b.
$5,700.
c.
$0.
d.
$4,500.
108.Orlov Corporation purchased 21,000 shares of Matsey Corporation common stock for $40 per share on January 1, 20×7. Matsey reported net income of $120,000 for 20×7 and paid dividends of $45,000 during 20×7. As of December 31, 20×7, the market value of Matsey Corporation common stock was $40 per share. Assuming the shares owned by Orlov represent 10 percent of the total outstanding stock of Matsey, Orlov Corporation should report the long-term investment on December 31, 20×7, at a carrying value of
a.
$844,000.
b.
$852,000.
c.
$84,000.
d.
$840,000.
109.Orlov Corporation purchased 8,000 shares of Matsey Corporation common stock for $40 per share on January 1, 20×7. Matsey reported net income of $111,000 for 20×7 and paid dividends of $45,000 during 20×7. As of December 31, 20×7, the market value of Matsey Corporation common stock was $40 per share. Assuming the shares owned by Orlov represent 30 percent of the total outstanding stock of Matsey, Orlov Corporation should report income from this investment for 20×7 of
a.
$19,800.
b.
$33,300.
c.
$0.
d.
$13,500.
