Scribd Logo
Upload

Welcome to Scribd!

  • ACC557 Financial Accounting - Week 9 Study Guide (Chapter 12) - Version 3 PDF

    Uploaded by

    teacher.theacestud
    105 views3 pages
    ACC557 Financial Accounting: Week 9 Study Guide (Chapter 12) – Version 3. Get an A++. ACC557 Financial Accounting: Week 9 Study Guide (Chapter 12) – Version 3. Get an A++. 1. Eck Corporation sells 250 shares of common stock being held as an investment. The shares were acquired six months ago at a cost of $25 a share. Eck sold the shares for $40 a share. The entry to record the sale is Cash 10,000 Gain on Sale of Stock Investments 3,750 Stock Investments 6,250 Stock Investments 10,000 Cash 10,000 Cash 10,000 Stock Investments 10,000 Cash 6,250 Loss on Sale of Stock Investments 3,750 Stock Investments 10,000 Multiple Choice Question 45 2. On January 1, Talent Company purchased as a short-term investment a $1,000, 8% bond for $1,050. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold? Cash 1,200 Debt Investments 1,200 Cash 1,220 Debt Investments 1,050 Gain on Sale of Debt Investments 150 Interest Revenue 20 Cash 1,220 Debt Investments 1,200 Interest Revenue 20 Cash 1,200 Debt Investments 1,050 Gain on Sale of Debt Investments 150 Multiple Choice Question 117 3. At the end of its first year, the trading securities portfolio consisted of the following common stocks. Cost Fair Value Atrium Corporation $ 46,400 $ 50,000 Barnes Inc. 60,000 55,800 Cantor Corporation 80,000 76,000 $186,400 $181,800 In the following year, the Barnes common stock is sold for cash proceeds of $56,000. The gain or loss to be recognized on the sale is a loss of $4,000. gain of $1,200. gain of $200. loss of $4,200. Multiple Choice Question 40 4. At the time of acquisition of a debt investment, the Stock Investments account is debited when bonds are purchased. the Investment account is credited for its cost plus brokerage fees. no journal entry is required. the cost principle applies. Multiple Choice Question 79 5. The account, Stock Investments, is a general ledger control account. another name for Debt Investments. a subsidiary ledger account. a long-term liability account. Multiple Choice Question 59 6. Tan Company had these transactions pertaining to stock investments: Feb. 1 Purchased 3,000 shares of Norton Company (10%) for $48,800 cash plus brokerage fees of $1,400. June 1 Received cash dividends of $2 per share on Norton stock. Oct. 1 Sold 1,200 shares of Norton stock for $24,000 less brokerage fees of $600. The entry to record the purchase of the Norton stock would include a credit to Cash for $48,800. debit to Stock Investments for $48,800. debit to Stock Investments for $50,200. debit to Investment Expense for $1,400. Multiple Choice Question 94 7. Mission Inc. earns $450,000 and pays cash dividends of $150,000 during 2013. Cox Corporation owns 70,000 of the 210,000 outstanding shares of Mission. How much revenue from investment should Cox report in 2013? $150,000 $200,000 $50,000 $100,000 Multiple Choice Question 138 8. Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or stock securities? The company may have excess cash. The company may invest for speculative reasons to increase the value in pension funds. The company may generate a significant portion of its earnings from investment income. The company may invest for the strategic reason of establishing a presence in a related industry. Multiple Choice Question 115 9. The balance sheet presentation of an unrealized loss on a non-trading security is similar to the statement presentation of treasury stock. discount on bonds payable. prepaid expenses. allowance for doubtful accounts. Multiple Choice Question 142 10. A company that acquires less than 20% ownership interest in another company should account for the stock investmen

    Original Title

    ACC557 Financial Accounting_ Week 9 Study Guide (Chapter 12) – Version 3.pdf

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    ACC557 Financial Accounting: Week 9 Study Guide (Chapter 12) – Version 3. Get an A++. ACC557 Financial Accounting: Week 9 Study Guide (Chapter 12) – Version 3. Get an A++. 1. Eck Corporation sells 250 shares of common stock being held as an investment. The shares were acquired six months ago at a cost of $25 a share. Eck sold the shares for $40 a share. The entry to record the sale is Cash 10,000 Gain on Sale of Stock Investments 3,750 Stock Investments 6,250 Stock Investments 10,000 Cash 10,000 Cash 10,000 Stock Investments 10,000 Cash 6,250 Loss on Sale of Stock Investments 3,750 Stock Investments 10,000 Multiple Choice Question 45 2. On January 1, Talent Company purchased as a short-term investment a $1,000, 8% bond for $1,050. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold? Cash 1,200 Debt Investments 1,200 Cash 1,220 Debt Investments 1,050 Gain on Sale of Debt Investments 150 Interest Revenue 20 Cash 1,220 Debt Investments 1,200 Interest Revenue 20 Cash 1,200 Debt Investments 1,050 Gain on Sale of Debt Investments 150 Multiple Choice Question 117 3. At the end of its first year, the trading securities portfolio consisted of the following common stocks. Cost Fair Value Atrium Corporation $ 46,400 $ 50,000 Barnes Inc. 60,000 55,800 Cantor Corporation 80,000 76,000 $186,400 $181,800 In the following year, the Barnes common stock is sold for cash proceeds of $56,000. The gain or loss to be recognized on the sale is a loss of $4,000. gain of $1,200. gain of $200. loss of $4,200. Multiple Choice Question 40 4. At the time of acquisition of a debt investment, the Stock Investments account is debited when bonds are purchased. the Investment account is credited for its cost plus brokerage fees. no journal entry is required. the cost principle applies. Multiple Choice Question 79 5. The account, Stock Investments, is a general ledger control account. another name for Debt Investments. a subsidiary ledger account. a long-term liability account. Multiple Choice Question 59 6. Tan Company had these transactions pertaining to stock investments: Feb. 1 Purchased 3,000 shares of Norton Company (10%) for $48,800 cash plus brokerage fees of $1,400. June 1 Received cash dividends of $2 per share on Norton stock. Oct. 1 Sold 1,200 shares of Norton stock for $24,000 less brokerage fees of $600. The entry to record the purchase of the Norton stock would include a credit to Cash for $48,800. debit to Stock Investments for $48,800. debit to Stock Investments for $50,200. debit to Investment Expense for $1,400. Multiple Choice Question 94 7. Mission Inc. earns $450,000 and pays cash dividends of $150,000 during 2013. Cox Corporation owns 70,000 of the 210,000 outstanding shares of Mission. How much revenue from investment should Cox report in 2013? $150,000 $200,000 $50,000 $100,000 Multiple Choice Question 138 8. Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or stock securities? The company may have excess cash. The company may invest for speculative reasons to increase the value in pension funds. The company may generate a significant portion of its earnings from investment income. The company may invest for the strategic reason of establishing a presence in a related industry. Multiple Choice Question 115 9. The balance sheet presentation of an unrealized loss on a non-trading security is similar to the statement presentation of treasury stock. discount on bonds payable. prepaid expenses. allowance for doubtful accounts. Multiple Choice Question 142 10. A company that acquires less than 20% ownership interest in another company should account for the stock investmen

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    105 views3 pages

    ACC557 Financial Accounting - Week 9 Study Guide (Chapter 12) - Version 3 PDF

    Uploaded by

    teacher.theacestud
    ACC557 Financial Accounting: Week 9 Study Guide (Chapter 12) – Version 3. Get an A++. ACC557 Financial Accounting: Week 9 Study Guide (Chapter 12) – Version 3. Get an A++. 1. Eck Corporation sells 250 shares of common stock being held as an investment. The shares were acquired six months ago at a cost of $25 a share. Eck sold the shares for $40 a share. The entry to record the sale is Cash 10,000 Gain on Sale of Stock Investments 3,750 Stock Investments 6,250 Stock Investments 10,000 Cash 10,000 Cash 10,000 Stock Investments 10,000 Cash 6,250 Loss on Sale of Stock Investments 3,750 Stock Investments 10,000 Multiple Choice Question 45 2. On January 1, Talent Company purchased as a short-term investment a $1,000, 8% bond for $1,050. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold? Cash 1,200 Debt Investments 1,200 Cash 1,220 Debt Investments 1,050 Gain on Sale of Debt Investments 150 Interest Revenue 20 Cash 1,220 Debt Investments 1,200 Interest Revenue 20 Cash 1,200 Debt Investments 1,050 Gain on Sale of Debt Investments 150 Multiple Choice Question 117 3. At the end of its first year, the trading securities portfolio consisted of the following common stocks. Cost Fair Value Atrium Corporation $ 46,400 $ 50,000 Barnes Inc. 60,000 55,800 Cantor Corporation 80,000 76,000 $186,400 $181,800 In the following year, the Barnes common stock is sold for cash proceeds of $56,000. The gain or loss to be recognized on the sale is a loss of $4,000. gain of $1,200. gain of $200. loss of $4,200. Multiple Choice Question 40 4. At the time of acquisition of a debt investment, the Stock Investments account is debited when bonds are purchased. the Investment account is credited for its cost plus brokerage fees. no journal entry is required. the cost principle applies. Multiple Choice Question 79 5. The account, Stock Investments, is a general ledger control account. another name for Debt Investments. a subsidiary ledger account. a long-term liability account. Multiple Choice Question 59 6. Tan Company had these transactions pertaining to stock investments: Feb. 1 Purchased 3,000 shares of Norton Company (10%) for $48,800 cash plus brokerage fees of $1,400. June 1 Received cash dividends of $2 per share on Norton stock. Oct. 1 Sold 1,200 shares of Norton stock for $24,000 less brokerage fees of $600. The entry to record the purchase of the Norton stock would include a credit to Cash for $48,800. debit to Stock Investments for $48,800. debit to Stock Investments for $50,200. debit to Investment Expense for $1,400. Multiple Choice Question 94 7. Mission Inc. earns $450,000 and pays cash dividends of $150,000 during 2013. Cox Corporation owns 70,000 of the 210,000 outstanding shares of Mission. How much revenue from investment should Cox report in 2013? $150,000 $200,000 $50,000 $100,000 Multiple Choice Question 138 8. Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or stock securities? The company may have excess cash. The company may invest for speculative reasons to increase the value in pension funds. The company may generate a significant portion of its earnings from investment income. The company may invest for the strategic reason of establishing a presence in a related industry. Multiple Choice Question 115 9. The balance sheet presentation of an unrealized loss on a non-trading security is similar to the statement presentation of treasury stock. discount on bonds payable. prepaid expenses. allowance for doubtful accounts. Multiple Choice Question 142 10. A company that acquires less than 20% ownership interest in another company should account for the stock investmen

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    $&&)LQDQFLDO$FFRXQWLQJ:HHN6WXG\*XLGH &KDSWHU

    9HUVLRQ*HWDQ$
    $&&)LQDQFLDO$FFRXQWLQJ:HHN6WXG\*XLGH &KDSWHU 9HUVLRQ*HWDQ$
    (FN&RUSRUDWLRQVHOOVVKDUHVRIFRPPRQVWRFNEHLQJKHOGDVDQLQYHVWPHQW7KHVKDUHV
    ZHUHDFTXLUHGVL[PRQWKVDJRDWDFRVWRIDVKDUH(FNVROGWKHVKDUHVIRUDVKDUH7KH
    HQWU\WRUHFRUGWKHVDOHLV
    &DVK
    *DLQRQ6DOHRI6WRFN,QYHVWPHQWV
    6WRFN,QYHVWPHQWV
    6WRFN,QYHVWPHQWV
    &DVK
    &DVK
    6WRFN,QYHVWPHQWV
    &DVK
    /RVVRQ6DOHRI6WRFN,QYHVWPHQWV
    6WRFN,QYHVWPHQWV
    0XOWLSOH&KRLFH4XHVWLRQ
    2Q-DQXDU\7DOHQW&RPSDQ\SXUFKDVHGDVDVKRUWWHUPLQYHVWPHQWDERQGIRU
    7KHERQGSD\VLQWHUHVWRQ-DQXDU\DQG-XO\7KHERQGLVVROGRQ2FWREHUIRU
    SOXVDFFUXHGLQWHUHVW,QWHUHVWKDVQRWEHHQDFFUXHGVLQFHWKHODVWLQWHUHVWSD\PHQWGDWH:KDWLV
    WKHHQWU\WRUHFRUGWKHFDVKSURFHHGVDWWKHWLPHWKHERQGLVVROG"
    &DVK
    'HEW,QYHVWPHQWV
    &DVK
    'HEW,QYHVWPHQWV
    *DLQRQ6DOHRI'HEW,QYHVWPHQWV
    ,QWHUHVW5HYHQXH
    &DVK
    'HEW,QYHVWPHQWV
    ,QWHUHVW5HYHQXH
    &DVK
    'HEW,QYHVWPHQWV
    *DLQRQ6DOHRI'HEW,QYHVWPHQWV
    0XOWLSOH&KRLFH4XHVWLRQ
    $WWKHHQGRILWVILUVW\HDUWKHWUDGLQJVHFXULWLHVSRUWIROLRFRQVLVWHGRIWKHIROORZLQJFRPPRQ
    VWRFNV
    &RVW)DLU9DOXH
    $WULXP&RUSRUDWLRQ
    %DUQHV,QF
    &DQWRU&RUSRUDWLRQ
    
    ,QWKHIROORZLQJ\HDUWKH%DUQHVFRPPRQVWRFNLVVROGIRUFDVKSURFHHGVRI7KHJDLQRU
    ORVVWREHUHFRJQL]HGRQWKHVDOHLVD
    ORVVRI
    JDLQRI
    JDLQRI
    ORVVRI
    0XOWLSOH&KRLFH4XHVWLRQ
    $WWKHWLPHRIDFTXLVLWLRQRIDGHEWLQYHVWPHQW
    WKH6WRFN,QYHVWPHQWVDFFRXQWLVGHELWHGZKHQERQGVDUHSXUFKDVHG

    WKH,QYHVWPHQWDFFRXQWLVFUHGLWHGIRULWVFRVWSOXVEURNHUDJHIHHV
    QRMRXUQDOHQWU\LVUHTXLUHG
    WKHFRVWSULQFLSOHDSSOLHV
    0XOWLSOH&KRLFH4XHVWLRQ
    7KHDFFRXQW6WRFN,QYHVWPHQWVLV
    DJHQHUDOOHGJHUFRQWURODFFRXQW
    DQRWKHUQDPHIRU'HEW,QYHVWPHQWV
    DVXEVLGLDU\OHGJHUDFFRXQW
    DORQJWHUPOLDELOLW\DFFRXQW
    0XOWLSOH&KRLFH4XHVWLRQ
    7DQ&RPSDQ\KDGWKHVHWUDQVDFWLRQVSHUWDLQLQJWRVWRFNLQYHVWPHQWV
    )HE3XUFKDVHGVKDUHVRI1RUWRQ&RPSDQ\  IRUFDVKSOXVEURNHUDJHIHHVRI
    
    -XQH5HFHLYHGFDVKGLYLGHQGVRISHUVKDUHRQ1RUWRQVWRFN
    2FW6ROGVKDUHVRI1RUWRQVWRFNIRUOHVVEURNHUDJHIHHVRI
    7KHHQWU\WRUHFRUGWKHSXUFKDVHRIWKH1RUWRQVWRFNZRXOGLQFOXGHD
    FUHGLWWR&DVKIRU
    GHELWWR6WRFN,QYHVWPHQWVIRU
    GHELWWR6WRFN,QYHVWPHQWVIRU
    GHELWWR,QYHVWPHQW([SHQVHIRU
    0XOWLSOH&KRLFH4XHVWLRQ
    0LVVLRQ,QFHDUQVDQGSD\VFDVKGLYLGHQGVRIGXULQJ&R[&RUSRUDWLRQ
    RZQVRIWKHRXWVWDQGLQJVKDUHVRI0LVVLRQ
    +RZPXFKUHYHQXHIURPLQYHVWPHQWVKRXOG&R[UHSRUWLQ"
    
    
    
    
    0XOWLSOH&KRLFH4XHVWLRQ
    :KLFKRIWKHIROORZLQJUHDVRQVEHVWH[SODLQVZK\DFRPSDQ\WKDWH[SHULHQFHVVHDVRQDO
    IOXFWXDWLRQVLQVDOHVPD\SXUFKDVHLQYHVWPHQWVLQGHEWRUVWRFNVHFXULWLHV"
    7KHFRPSDQ\PD\KDYHH[FHVVFDVK
    7KHFRPSDQ\PD\LQYHVWIRUVSHFXODWLYHUHDVRQVWRLQFUHDVHWKHYDOXHLQSHQVLRQIXQGV
    7KHFRPSDQ\PD\JHQHUDWHDVLJQLILFDQWSRUWLRQRILWVHDUQLQJVIURPLQYHVWPHQWLQFRPH
    7KHFRPSDQ\PD\LQYHVWIRUWKHVWUDWHJLFUHDVRQRIHVWDEOLVKLQJDSUHVHQFHLQDUHODWHGLQGXVWU\
    0XOWLSOH&KRLFH4XHVWLRQ
    7KHEDODQFHVKHHWSUHVHQWDWLRQRIDQXQUHDOL]HGORVVRQDQRQWUDGLQJVHFXULW\LVVLPLODUWRWKH
    VWDWHPHQWSUHVHQWDWLRQRI
    WUHDVXU\VWRFN
    GLVFRXQWRQERQGVSD\DEOH
    SUHSDLGH[SHQVHV
    DOORZDQFHIRUGRXEWIXODFFRXQWV
    0XOWLSOH&KRLFH4XHVWLRQ
    $FRPSDQ\WKDWDFTXLUHVOHVVWKDQRZQHUVKLSLQWHUHVWLQDQRWKHUFRPSDQ\VKRXOGDFFRXQW
    IRUWKHVWRFNLQYHVWPHQWLQWKDWFRPSDQ\XVLQJ
    WKHVLJQLILFDQWPHWKRG
    WKHHTXLW\PHWKRG
    FRQVROLGDWHGILQDQFLDOVWDWHPHQWV
    WKHFRVWPHWKRG
    0XOWLSOH&KRLFH4XHVWLRQ
    :KLFKRIWKHIROORZLQJLVQRWDWUXHVWDWHPHQWUHJDUGLQJVKRUWWHUPGHEWLQYHVWPHQWV"
    ,QYHVWPHQWVDUHIUHTXHQWO\JRYHUQPHQWRUFRUSRUDWHERQGV
    7KHVHFXULWLHVXVXDOO\SD\LQWHUHVW
    7KLVW\SHRILQYHVWPHQWPXVWEHFXUUHQWO\WUDGHGLQWKHVHFXULWLHVPDUNHW

    'HEWLQYHVWPHQWVDUHUHFRUGHGDWWKHSULFHSDLGOHVVEURNHUDJHIHHV
    0XOWLSOH&KRLFH4XHVWLRQ
    5HYHQXHLVUHFRJQL]HGZKHQFDVKGLYLGHQGVDUHUHFHLYHGXQGHU
    WKHFRVWPHWKRG
    WKHHTXLW\PHWKRG
    WKHFRQWUROOLQJLQWHUHVWPHWKRG
    ERWKWKHFRVWDQGHTXLW\PHWKRGV
    0XOWLSOH&KRLFH4XHVWLRQ
    $QXQUHDOL]HGORVVRQQRQWUDGLQJVHFXULWLHVLV
    FORVHGRXWDWWKHHQGRIWKHDFFRXQWLQJSHULRG
    GHGXFWHGIURPWKHFRVWRIWKHLQYHVWPHQW
    UHSRUWHGDVDVHSDUDWHFRPSRQHQWRIVWRFNKROGHUVHTXLW\
    UHSRUWHGXQGHU2WKHU([SHQVHVDQG/RVVHVLQWKHLQFRPHVWDWHPHQW
    0XOWLSOH&KRLFH4XHVWLRQ
    0LVVLRQ,QFHDUQVDQGSD\VFDVKGLYLGHQGVRIGXULQJ&R[&RUSRUDWLRQ
    RZQVRIWKHRXWVWDQGLQJVKDUHVRI0LVVLRQ
    :KDWDPRXQWVKRXOG&R[VKRZLQWKHLQYHVWPHQWDFFRXQWDW'HFHPEHULIWKHEHJLQQLQJRI
    WKH\HDUEDODQFHLQWKHDFFRXQWZDV"
    
    
    
    
    0XOWLSOH&KRLFH4XHVWLRQ
    7KHFRQWUDDFFRXQW)DLUYDOXH$GMXVWPHQWLVDOVRFDOOHGD Q
    YDOXDWLRQDFFRXQW
    RIIVHWDFFRXQW
    RSSRVLWHDFFRXQW
    DGMXVWPHQWDFFRXQW
    $&&)LQDQFLDO$FFRXQWLQJ:HHN6WXG\*XLGH &KDSWHU 9HUVLRQ*HWDQ$

    You might also like