Question 1

Marjam Company owns 41,000 shares of MacKenzie Company's 100,000 outstanding shares of common stock.MacKenzie Company pays $25,000 in total cash dividends to its shareholders.Marjam's entry to record the cash dividend received from MacKenzie would include a:

Accepted Answer

A) Debit to Dividend Revenue for $10,250. 
B) Debit to Interest Revenue for $10,250. 
C) Credit to Equity Method Investments for $10,250. 
D) Credit to Equity Method Investments for $25,000. 
E) Credit to Dividend Revenue for $25,000.

Question 2

Discuss the reasons companies make investments.

Accepted Answer

The answer of Discuss the reasons companies make investments....

Question 3

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.

Accepted Answer

The answer of FreshFoods,Inc.sells American gourmet foods to merchandisers in...

Question 4

Investments in equity securities where the investor has a significant,but not controlling influence,are accounted for using the ________ method.

Accepted Answer

The answer of Investments in equity securities where the investor...

Question 5

Investments in held-to-maturity debt securities are always current assets.

Accepted Answer

A) True 
 B)False

Question 6

What is comprehensive income and how is it usually reported in the financial statements?

Accepted Answer

The answer of What is comprehensive income and how is...

Question 7

Kendall Corp.purchased at par value,$75,000 of Shrem Company's 8% bonds that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.Kendall plans to hold the bonds until they mature.When the bonds mature,Kendall should prepare the following journal entry (assume the semiannual interest was separately recorded):

Accepted Answer

A) debit Long-Term Investments-HTM,$75,000; credit Cash,$75,000. 
B) debit Cash,$6,000; credit,Unrealized Gain-Equity,$6,000. 
C) debit Cash,$75,000; credit Debt Investments-HTM,$75,000. 
D) debit Unrealized Gain-Equity,$6,000; credit Cash,$6,000. 
E) debit Cash,$75,000; credit Long-Term Investments-Trading,$75,000.

Question 8

Element Company had the following long-term available-for-sale securities in its portfolio at December 31 for each of the years listed.The year-end cost and fair values for its portfolio follow.Beginning with Year 1,prepare the appropriate journal entry to record each year-end market adjustment for these securities.

Accepted Answer

The answer of Element Company had the following long-term available-for-sale...

Question 9

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:

Accepted Answer

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.

Question 10

On March 15,Alan Company purchased 10% of Cameo Corp.'s stock for $35,000.This is the company's first and only stock investment.On Alan's June 30 year-end,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-Stock account. 
B) Record a debit to the Unrealized Loss-Income account. 
C) Report a decrease in the Gain on Sale of Investment income statement account. 
D) Report an increase in the asset section of the balance sheet. 
E) Record a credit to the Unrealized Gain-Income account.

Question 11

Landmark buys $300,000 of SRW Company's 8%,5-year bonds payable,at par value on July 1.Interest payments are made semiannually on December 31 and June 30.The journal entry Landmark should make to record interest earned at year-end December 31 is:

Accepted Answer

A) Debit Cash $12,000,credit Interest Revenue $12,000. 
B) Debit Cash $24,000,credit Interest Revenue $24,000. 
C) Debit Cash $8,000,credit Interest Revenue $8,000. 
D) Debit Interest Receivable $12,000,credit Interest Revenue $12,000. 
E) Debit Interest Revenue $12,000,credit Cash $12,000.

Question 12

A company received dividends of $0.35 per share on 300 shares of stock it holds as a stock investment with insignificant influence.The journal entry to record this transaction would be to debit Cash for $105 and credit Dividend Revenue for $105.

Accepted Answer

A) True 
 B)False

Question 13

J.P.Industries purchased Yang's notes for $143,375 as a long-term investment.The investment is classified as available-for-sale.J.P.'s entry to record the purchase transaction would include a:

Accepted Answer

A) Credit to Short-Term Investments-AFS for $143,375. 
B) Credit to Long-Term Investments-AFS for $143,375. 
C) Credit to Notes Payable for $143,375. 
D) Debit to Equity Investments-AFS for $143,375. 
E) Debit to Debt Investments-AFS for $143,375.

Question 14

Define the return on total assets and explain how it is used to measure a company's financial performance.

Accepted Answer

The answer of Define the return on total assets and...

Question 15

Short-term investments are intended to be converted into cash within the longer of one year or the operating cycle of the business,and are readily convertible to cash.

Accepted Answer

A) True 
 B)False

Question 16

Long-term investments in debt securities not classified as trading or held-to-maturity securities are classified as available-for-sale securities.

Accepted Answer

A) True 
 B)False

Question 17

On February 15,Jewel Company buys 7,000 shares of Marcelo Corp.at $28.53 per share.The stock is classified as a stock investment with insignificant influence.This is the company's first and only stock investment.On March 15,Marcelo Corp.declares a dividend of $1.15 per share payable to stockholders of record on April 15.Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp.stock on November 17 of the current year for $29.30 per share.
-The fair value of the remaining shares is $29.50 per share.The impact on Jewel's net income as a result of its investment in Marcelo Corp.was a(n):

Accepted Answer

A) Increase to income of $14,140. 
B) Increase to income of $8,050. 
C) Increase to income of $10,745. 
D) Decrease to income of $8,050. 
E) Decrease to income of $5,440.

Question 18

A company should report its portfolio of trading debt securities at its fair value.

Accepted Answer

A) True 
 B)False

Question 19

All of the following statements relating to accounting for international operations are true except:

Accepted Answer

A) Foreign exchange gains or losses can occur when accounting for international sales transactions. 
B) Gains and losses from foreign exchange transactions are accumulated in the Fair Value Adjustment Account and are reported on the balance sheet. 
C) Gains and losses from foreign exchange transactions are accumulated in the Foreign Exchange Gain (or Loss)account. 
D) The balance in the Foreign Exchange Gain (or Loss)account is reported on the income statement. 
E) Foreign exchange gains or losses can occur when accounting for international purchases transactions.

Question 20

On February 15,Jewel Company buys bonds of Marcelo Corp.for $200,000.The investment is classified as available-for-sale securities.This is the company's first and only investment in available-for-sale securities.On December 31,the bonds had a fair value of $200,300.The entry to record the year-end adjustment is:

Accepted Answer

A) Debit Cash $300; credit Dividend Revenue $300. 
B) Debit Fair Value Adjustment-Available-for-Sale $300; credit Unrealized Gain-Equity $300. 
C) Debit Fair Value Adjustment-Available-for-Sale $300; credit Interest Revenue $300. 
D) Debit Fair Value Adjustment-Available-for-Sale $300; credit Realized Gain-Income $300. 
E) Debit Cash $300; credit Gain on Sale of Investments $300.

Exam 26: Investments

Marjam Company owns 41,000 shares of MacKenzie Company's 100,000 outstanding shares of common stock.MacKenzie Company pays $25,000 in total cash dividends to its shareholders.Marjam's entry to record the cash dividend received from MacKenzie would include a:

Discuss the reasons companies make investments.

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.

Investments in equity securities where the investor has a significant,but not controlling influence,are accounted for using the ________ method.

Investments in held-to-maturity debt securities are always current assets.

What is comprehensive income and how is it usually reported in the financial statements?

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:

On March 15,Alan Company purchased 10% of Cameo Corp.'s stock for $35,000.This is the company's first and only stock investment.On Alan's June 30 year-end,the stock had a fair value of $34,000.Alan should do which of the following:

Landmark buys $300,000 of SRW Company's 8%,5-year bonds payable,at par value on July 1.Interest payments are made semiannually on December 31 and June 30.The journal entry Landmark should make to record interest earned at year-end December 31 is:

A company received dividends of $0.35 per share on 300 shares of stock it holds as a stock investment with insignificant influence.The journal entry to record this transaction would be to debit Cash for $105 and credit Dividend Revenue for $105.

J.P.Industries purchased Yang's notes for $143,375 as a long-term investment.The investment is classified as available-for-sale.J.P.'s entry to record the purchase transaction would include a:

Define the return on total assets and explain how it is used to measure a company's financial performance.

Short-term investments are intended to be converted into cash within the longer of one year or the operating cycle of the business,and are readily convertible to cash.

Long-term investments in debt securities not classified as trading or held-to-maturity securities are classified as available-for-sale securities.

A company should report its portfolio of trading debt securities at its fair value.

All of the following statements relating to accounting for international operations are true except: