Question : 61.The following information related to the marketable security investments of : 1241894

 

 

61.The following information related to the marketable security investments of Solo Company.  Securities held on December 31, 2014, as described in the table below.  AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.

 

Securities

No. of Shares

Cost/Share

Total Cost

Value/Share

Total Market Value

AAA

100

$29

$2,900

$34

$3,400

BBB

250

30

7,500

28

7,000

CCC

150

16

2,400

20

3,000

 

 

 

$12,800

 

$13,400

 

Early in 2015, the company sold 50 shares of BBB for $26 per share.  During 2015, Solo received dividends of $3 per share on the remaining 200 shares of BBB, and dividends of $2.50 per share were declared, but not yet received on the 150 shares of CCC stock. The per-share market values of BBB and CCC on December 31, 2015, were $24 and $18, respectively.  During 2016, Solo sold the remaining 200 shares of BBB stock for $26 per share and the 150 shares of CCC for $22 per share.

 

The journal entry to record the dividends received on the BBB securities and the dividends declared on the CCC stock in 2015 will include:

a.A credit to Dividend Revenue for $975.

b.A credit to Dividend Payable for $375.

c.A credit to Cash for $600.

d.A debit to Dividend Expense for $375.

 

 

 

62.The following information related to the marketable security investments of Solo Company.  Securities held on December 31, 2014, as described in the table below.  AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.

Securities

No. of Shares

Cost/Share

Total Cost

Value/Share

Total Market Value

AAA

100

$29

$2,900

$34

$3,400

BBB

250

30

7,500

28

7,000

CCC

150

16

2,400

20

3,000

 

 

 

$12,800

 

$13,400

 

Early in 2015, the company sold 50 shares of BBB for $26 per share.  During 2015, Solo received dividends of $3 per share on the remaining 200 shares of BBB, and dividends of $2.50 per share were declared, but not yet received on the 150 shares of CCC stock. The per-share market values of BBB and CCC on December 31, 2015, were $24 and $18, respectively.  During 2016, Solo sold the remaining 200 shares of BBB stock for $26 per share and the 150 shares of CCC for $22 per share.

 

The journal entry to record the revaluation of BBB shares in 2015 is:

a.Trading Securities800

Unrealized Gain on Trading Securities800

b.Unrealized Loss on Trading Securities 800

Trading Securities800

c.Unrealized Loss on Trading Securities 600

Cash600

d.Trading Securities 800

Realized Gain on Trading Securities 800

 

 

63.The following information related to the marketable security investments of Solo Company.  Securities held on December 31, 2014, as described in the table below.  AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.

 

Securities

No. of Shares

Cost/Share

Total Cost

Value/Share

Total Market Value

AAA

100

$29

$2,900

$34

$3,400

BBB

250

30

7,500

28

7,000

CCC

150

16

2,400

20

3,000

 

 

 

$12,800

 

$13,400

 

During 2015, Solo received word that dividends of $2.50 per share were declared, but not yet received on the 150 shares of CCC stock. The per-share market value of CCC on December 31, 2015, was $18.  During 2016, Solo sold 150 shares of CCC for $22 per share.

 

The journal entry to record the revaluation of CCC shares in 2015 is:

a.Available-for-Sale Securities300

Unrealized Gain on Available-for-Sale Securities300

b.Unrealized Price Increase on Available-for-Sale Securities300

Available-for-Sale Securities300

c.Realized Loss on Available-for-Sale Securities300

Available-for-Sale Securities300

d.Available-for-Sale Securities 400

Unrealized Price Increase on Available-for-Sale Securities400

 

 

64.The following information related to the marketable security investments of Solo Company.  Securities held on December 31, 2014, as described in the table below.  AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.

 

Securities

No. of Shares

Cost/Share

Total Cost

Value/Share

Total Market Value

AAA

100

$29

$2,900

$34

$3,400

BBB

250

30

7,500

28

7,000

CCC

150

16

2,400

20

3,000

 

 

 

$12,800

 

$13,400

 

Early in 2015, the company sold 50 shares of BBB for $26 per share.  During 2015, Solo received dividends of $3 per share on the remaining 200 shares of BBB.  The per-share market value of BBB on December 31, 2015, was $24.  During 2016, Solo sold the remaining 200 shares of BBB stock for $26 per share.

The journal entry to record the sale of 200 shares of BBB stock in 2016 is:

a.Cash5,200

Trading Securities4,800

Unrealized Gain on Trading Securities400

 

b.Cash5,200

Unrealized Loss on Trading Securities400

Trading Securities4,800

 

c.Cash5,200

Trading Securities4,800

Realized Gain on Trading Securities400

 

d.Trading Securities6,000

Realized Gain on Trading Securities800

Cash5,200

 

 

 

 

65.The following information related to the marketable security investments of Solo Company.  Securities held on December 31, 2014, as described in the table below.  AAA and BBB are classified as trading securities and CCC is classified as an available-for-sale security.

 

Securities

No. of Shares

Cost/Share

Total Cost

Value/Share

Total Market Value

AAA

100

$29

$2,900

$34

$3,400

BBB

250

30

7,500

28

7,000

CCC

150

16

2,400

20

3,000

 

 

 

$12,800

 

$13,400

 

During 2015, Solo received word that dividends of $$2.50 per share were declared, but not yet received on the 150 shares of CCC stock. The per-share market value of CCC on December 31, 2015, was $18.  During 2016, Solo sold 150 shares of CCC for $22 per share.

 

The journal entry to record the sale of 150 shares of CCC stock in 2016 would include:

a.A debit to Cash for $2,700.

b.A debit to Unrealized Price Increase on Available-for-Sale Securities for $300.

c.A debit to Unrealized Gain on Available-for-Sale Securities for $900.

d.A debit to Available-for-Sale Securities for $3,300.

 

 

66.Under GAAP, market values based on quoted prices in active markets for identical securities are called:

a.Level 1 measurements

b.Level 2 measurements

c.Level 3 measurements

d.None of the above

 

 

 

67.Under GAAP, market values based on less reliable, unobservable inputs for securities are called:

a.Level 1 measurements

b.Level 2 measurements

c.Level 3 measurements

d.None of the above

 

 

 

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