E2-1 Multiple-Choice Questions on Use of Cost and Equity Methods [AICPA Adapted]Select the correct answer for each of the following questions.1. Peel Company received a cash dividend from a common stock investment. Should Peelreport an increase in the investment account if it uses the cost method or equity method ofaccounting?CostEquitya. NoNob.YesYesCYesd. NoNoYes2. In 20X0, Neil Company held the following investments in common stock:25,000 shares of B&K Inc.'s 100,000 outstanding shares. Neil's level of ownership gives itthe ability to exercise significant influence over the financial and operating policies of B&K6,000 shares of Amal Corporation's 309,000 outstanding shares.During 20X0, Neil received the following distributions from its common stock investments:November 6November 11December 26$30,000 cash dividend from B&K$1,500 cash dividend from Amal3 percent common stock dividend from AmalThe closing price of this stock was $115 per share.What amount of dividend revenue should Neil report for 20X0?a. $1,500.b. $4,200.c. $31,500.d. $34,200.

Dividend:The dividend refers to the amount which is paid to the shareholders whether it is equity or…

Answered: Select the correct answer for each of…

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 4AP

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Fill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Nash's Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Swifty Company. 1. At the beginning of Year 1, Nash's bought 30% of Swifty's common stock at its book value. Total book value of all Swifty's common stock was $720,000 on this date. 2. (a) During Year 1, Swifty reported $50,000 of net income. (b) During Year 1, Swifty paid $28,000 of dividends. 3. (a) During Year 2, Swifty reported $25,000 of net income. (b) During Year 2, Swifty paid $18,000 of dividends. 4. (a) During Year 3, Swifty reported a net loss of $8,000. (b) During Year 3, Swifty paid $3,500 of dividends. 5. Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.
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Determine the effects of the following transactions on Current assets, Current liabilities, and Working Capital. Write “Inc” for an Increase, “Dec” for a Decrease, or “NE” if there is No Effect. Write your answers in the blanks provided. Current Asset Current Liability Net Working Capital 1. Sale of merchandise on account 2. Acquired shares of ABS CBN for cash 3. Pays the long-term debt of P150,000 4. Sells old machine for P10,000 cash 5. Issued shares of stock to cash investors 6. Declared cash dividends 7. Payment of advance rentals (asset method) 8. One year loan from a bank 9. Issued shares of stock to pay short term loan 10. Collection of receivables 11. Cash redemption of bonded debt 12. Six months interest received in advance(liability method is used) 13. Issued stock dividends 14. Payment of cash dividends declared in #6 15. Sell of equipment for P50,000;…
The Debt-equity ratio of a company is 1:2, state giving reasons which of thefollowing would improve, reduce or no change the ratio:-1) Debenture redeemed for cash2) Issue new equity shares3) Payment of Proposed dividends4) Goods Purchased on Credit5) Goods Purchased on Cash6) Redemption of Debentures against the Purchase of a Fixed Assets.
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Which will demonstrate an agreement to refinance (choose the incorrect one)? Group of answer choices 1.Equity security has in fact been issued before the issuance of the financial statements for the purpose of refinancing. 2.Preferred stock has in fact been issued before the issuance of financial statements for the purpose of obtaining working capital. 3.Before the issuance of the financial statements, the enterprise has in fact entered into a financing agreement that clearly permits the enterprise to refinance the currently maturing long-term debt on a long-term basis. 4.Long-term obligation has in fact been issued before the issuance of the financial statements for the purpose of refinancing.
1. The cost method of accounting for stock investments is used when the company acquires a. Greater than 50% of the company's stock b. Between 20% to 50% of the company's stock c. Less than 20% of the company's stock 2. The significance of percentage of ownership relates to how much _____________ the acquiring company has in the new company. a. data b. control c. confidence
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Ma1. -The market value of Investee is $1,000,000. Investor owns 20% of Investee's common stock. Investee reported net income of $200,000 and paid cash dividends in the amount of $40,000. a. The investment income that Investor will recognize is $8,000 b. The investment income that Investor will recognize is $40,000 c. The investment income that Investor will recognize is $32,000 d. Investment income cannot be determined from the information provided. -Suppose that, in the previous question, Investor does not have the ability to exercise significant influence over Investee. The investment income that Investor will recognize is: a. $8,000 b. $40,000 c. $32,000 d. cannot be determined
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N4 common stockholders of a business enterprise are said to be the residual owners which mean that they a. have thr rights to specific assets of the business b. are entitled to a dividend every year in which the business earns profit c. can negotiate individual comtrscts on behalf of the enterprise d. bear the ultimate risks and uncertainties and recieve the benefits if enterprise ownership.

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