Question 1

________ are investments in securities that are not readily convertible to cash, or are not intended to be converted to cash in the short-term.

Accepted Answer

Long-term

Question 2

On January 3, Kostansas Corporation purchased 5,000 shares of Morton, Inc. for $40 per share plus
$700 in broker commissions. These shares represent a 40% ownership in Morton, Inc. Prepare the journal entry Kostansas Corporation should record for the investment transaction.

Accepted Answer

Jan. 3 Lon

Question 3

The two business entities involved in an investment in securities with controlling influence, for which consolidated financial statements are prepared, are known as:

Accepted Answer

A)  Parent and Subsidiary 
B)  Parent and Investor 
C)  Both are referred to as partners. 
D)  Subsidiary and Investee 
E)  Consolidator and Parent 
A)  Parent and Subsidiary 
B)  Parent and Investor 
C)  Both are referred to as partners. 
D)  Subsidiary and Investee 
E)  Consolidator and Parent

Question 4

On January 2, Froxel Company purchased 10,000 shares of Sandia Corp. common stock at $19 per share plus a $3,000 commission. This represents 30% of Sandia Corp.'s outstanding stock. On August 6, Sandia Corp. declared and paid cash dividends of $1.75 per share, and on December 31 it reported net income of $150,000. Prepare the necessary entries for Froxel to account for these transactions and events.

Accepted Answer

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Question 5

Identify the classifications for non-influential investments in securities.What are the accounting basics for non-influential investments in securities, including acquisition, dividends earned, and disposition?

Accepted Answer

Non-influential investments in securitie

Question 6

Return on total assets is computed by dividing ________ by ________.

Accepted Answer

net income

Question 7

On May 1 of the current year, a company paid $200,000 to purchase 7%, 10-year bonds with a par value of $200,000; interest is paid semiannually on May 1 and November 1. The company intends to hold the bonds until they mature. Prepare the journal entries to record (1) the bond purchase, (2) the receipt of the first semiannual interest payment on November 1 of the current year, (3) the accrual of interest for year-end December 31, and (4) the receipt of the second semiannual payment on May 1.

Accepted Answer

None

Question 8

If a U.S. company's credit sale to an international customer allows payment to be made in a foreign currency, the sale transaction is recorded using the exchange rate on the date of sale.

Accepted Answer

A) True 
 B)False

Question 9

A company has net income of $130,500. Its net sales were $1,740,000 and its average total assets were $2,750,000. Its profit margin equals 7.5%.

Accepted Answer

A) True 
 B)False

Question 10

Scotsland Company had the following transactions relating to investments in trading securities during the year. Prepare the required general journal entries for these transactions.
May 4 Scotsland purchased 600 shares of Lobe Company stock at $120 per share plus a
$750 brokerage fee.
July 1 Scotsland received a $2.50 per share cash dividend on the Lobe Company stock.
Sept. 15 Sold 300 shares of Lobe Company stock for $125 per share, less a $450 brokerage fee.
Dec. 31 The fair value of the Lobe Company stock (the only investment that Scotsland owns) is $124 per share. The balance of the Fair value Adjustment-Trading account had a zero balance prior to adjustment.

Accepted Answer

@#IMG-DLM& Unrealize

Question 11

FreshFoods, Inc. sells American gourmet foods to merchandisers in Singapore. Prepare the journal entries for FreshFoods, to record the following transactions. Include any year-end adjustments.
Dec 20 Sold items to Tan, Inc., for 60,000 Singapore dollars. The exchange rate was
$0.476 per Singapore dollar. The purchase terms were n/30.
Dec 31 The exchange rate was $0.480 per Singapore dollar.
Jan 17 Received payment from Tan for the December 20 sale. The exchange rate was
$0.495 per Singapore dollar.

Accepted Answer

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Question 12

If a U.S. company makes a credit sale to a foreign company, the sales price must be translated into dollars as of the date of______ .

Accepted Answer

The answer of If a U.S. company makes a credit...

Question 13

Landmark buys $300,000 of Schroeter Company's 8%, 5-year bonds payable at par value on September 1. Interest payments are made semiannually on March 1 and September 1. The journal entry Landmark should record to accrue interest earned at year-end December 31 is:

Accepted Answer

A)  Debit Interest Receivable $12,000, credit Interest Revenue $12,000. 
B)  Debit Interest Receivable $8,000, credit Interest Revenue $8,000. 
C)  Debit Cash $8,000, credit Interest Revenue $8,000. 
D)  Debit Interest Revenue $8,000, credit Interest Receivable $8,000. 
E)  Debit Cash $12,000, credit Interest Revenue $12,000. 
A)  Debit Interest Receivable $12,000, credit Interest Revenue $12,000. 
B)  Debit Interest Receivable $8,000, credit Interest Revenue $8,000. 
C)  Debit Cash $8,000, credit Interest Revenue $8,000. 
D)  Debit Interest Revenue $8,000, credit Interest Receivable $8,000. 
E)  Debit Cash $12,000, credit Interest Revenue $12,000.

Question 14

________ are debt and equity securities that a company intends to actively manage and trade for a profit.

Accepted Answer

The answer of ________ are debt and equity securities that...

Question 15

If the exchange rate for Canadian and U.S. dollars is 0.7382 to 1, this implies that 2 Canadian dollars can be purchased for $1.48 U.S. dollars.

Accepted Answer

A) True 
 B)False

Question 16

Kim Manufacturing purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound. At the year-end balance sheet date, the exchange rate increased to $1.69. Kim must record a gain of $600.

Accepted Answer

A) True 
 B)False

Question 17

Long-term investments in available-for-sale securities are reported at their ________ on the balance sheet.

Accepted Answer

The answer of Long-term investments in available-for-sale securities are reported...

Question 18

Cloverton Corporation had net income of $30,000, net sales of $1,000,000, and average total assets of $500,000. Its return on total assets is:

Accepted Answer

A)  200% 
B)  1.5% 
C)  6% 
D)  3% 
E)  17% 
A)  200% 
B)  1.5% 
C)  6% 
D)  3% 
E)  17%

Question 19

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Accepted Answer

A) True 
 B)False

Question 20

On March 15, Alan Company purchased 10,000 shares of Cameo Corp. stock for $35,000. The investment is classified as available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On June 30, the stock had a fair value of $34,000. Alan should do which of the following:

Accepted Answer

A)  Record a debit to the Fair Value Adjustment-AFS account. 
B)  Report an increase in the asset section of the balance sheet. 
C)  Report a decrease in the Gain on Sale of Investment income statement account. 
D)  Record an increase to the Unrealized Gain-Income account. 
E)  Record an increase to the Unrealized Loss-Equity account. 
A)  Record a debit to the Fair Value Adjustment-AFS account. 
B)  Report an increase in the asset section of the balance sheet. 
C)  Report a decrease in the Gain on Sale of Investment income statement account. 
D)  Record an increase to the Unrealized Gain-Income account. 
E)  Record an increase to the Unrealized Loss-Equity account.

Exam 15: Investments

________ are investments in securities that are not readily convertible to cash, or are not intended to be converted to cash in the short-term.

On January 3, Kostansas Corporation purchased 5,000 shares of Morton, Inc. for $40 per share plus $700 in broker commissions. These shares represent a 40% ownership in Morton, Inc. Prepare the journal entry Kostansas Corporation should record for the investment transaction.

The two business entities involved in an investment in securities with controlling influence, for which consolidated financial statements are prepared, are known as:

Identify the classifications for non-influential investments in securities.What are the accounting basics for non-influential investments in securities, including acquisition, dividends earned, and disposition?

Return on total assets is computed by dividing ________ by ________.

If a U.S. company's credit sale to an international customer allows payment to be made in a foreign currency, the sale transaction is recorded using the exchange rate on the date of sale.

A company has net income of $130,500. Its net sales were $1,740,000 and its average total assets were $2,750,000. Its profit margin equals 7.5%.

If a U.S. company makes a credit sale to a foreign company, the sales price must be translated into dollars as of the date of______ .

Landmark buys $300,000 of Schroeter Company's 8%, 5-year bonds payable at par value on September 1. Interest payments are made semiannually on March 1 and September 1. The journal entry Landmark should record to accrue interest earned at year-end December 31 is:

________ are debt and equity securities that a company intends to actively manage and trade for a profit.

If the exchange rate for Canadian and U.S. dollars is 0.7382 to 1, this implies that 2 Canadian dollars can be purchased for $1.48 U.S. dollars.

Kim Manufacturing purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound. At the year-end balance sheet date, the exchange rate increased to $1.69. Kim must record a gain of $600.

Long-term investments in available-for-sale securities are reported at their ________ on the balance sheet.

Cloverton Corporation had net income of $30,000, net sales of $1,000,000, and average total assets of $500,000. Its return on total assets is:

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters

Return on total assets is computed by dividing by .