ACCT 303 CH 17 COM

d

Assuming that Moss Company uses the effective-interest method, what is the amount of interest revenue that would be recognized in 2018 related to these bonds? a. $50,000 b. $53,208 c. $47,890 d. $47,698

b

For the year ended December 31, 2018, Patton Company should report interest revenue from the Scott Company bonds of: a. $158,970. b. $155,283. c. $155,130. d. $150,000.

b

If the beginning balance in the investment account was $900,000, the balance at December 31, 2018 should be a. $900,000. b. $1,020,000. c. $1,080,000. d. $1,200,000.

d

On July 1, 2018, Patton Company should increase its Debt Investments account for the Scott Company bonds by a. $8,970. b. $5,140. c. $4,485. d. $2,571.

d

Tracy should report investment revenue for 2018 of a. $60,000. b. $120,000. c. $150,000. d. $180,000.

b

What amount of unrealized loss on these debt securities should be included in Calhoun's stockholders' equity section of the balance sheet at December 31, 2018? a. $40,000. b. $30,000. c. $20,000. d. $0.

c

Ziegler Corporation purchased 25,000 shares of common stock of the Sherman Corporation for $40 per share on January 2, 2017. Sherman Corporation had 100,000 shares of common stock outstanding during 2018, paid cash dividends of $150,000 during 2018, and reported net income of $500,000 for 2018. Ziegler Corporation should report revenue from investment for 2018 in the amount of a. $37,500. b. $87,500. c. $125,000. d. $137,500.

B

. At December 31, 2018, Atlanta Company has an equity portfolio valued at $160,000. Its cost was $132,000. If the Securities Fair Value Adjustment has a debit balance of $8,000, which of the following journal entries is required at December 31, 2018? a. Fair Value Adjustment 28,000 Unrealized Holding Gain or Loss-Income 28,000 b. Fair Value Adjustment 20,000 Unrealized Holding Gain or Loss-Income 20,000 c. Unrealized Holding Gain or Loss-Income 28,000 Fair Value Adjustment 28,000 d. Unrealized Holding Gain or Loss-Income 20,000 Fair Value Adjustment 20,000

a

Assuming that Moss Company uses the straight-line method, what is the amount of premium amortization that would be recognized in 2019 related to these bonds? a. $3,209 b. $2,110 c. $2,300 d. $2,510

c

At April 1, 2019, Landis Company sold the Ritter bonds for $3,090,000. After accruing for interest, the carrying value of the Ritter bonds on April 1, 2019 was $3,097,440. Assuming Landis Company has a portfolio of Available-for-Sale Debt Securities, what should Landis Company report as a gain or loss on the bonds? a. ($88,110). b. ($65,610). c. ($7,440). d. $ 0.

d

At December 31, 2018, the fair value of the Carlin, Inc. bonds was $1,272,000. What should Richman Company report as other comprehensive income and as a separate component of stockholders' equity? a. $0 b. $8,640 c. $22,104 d. $30,744

a

At December 31, 2018, the fair value of the Ritter, Inc. bonds was $3,180,000. What should Landis Company report as other comprehensive income and as a separate component of stockholders' equity? a. $76,860. b. $55,260. c. $21,600. d. No entry should be made.

B

At February 1, 2019, Richman Company sold the Carlin bonds for $1,236,000. After accruing for interest, the carrying value of the Carlin bonds on February 1, 2019 was $1,240,500. Assuming Richman Company has a portfolio of available-for-sale debt investments, what should Richman Company report as a gain (or loss) on the bonds? a. $0. b. ($4,500). c. ($26,244). d. ($35,244).

b

At the end of 2018, Hauke Company purchased 6,000, $1,000, 9% bonds. The carrying value of the bonds at December 31, 2018 was $5,880,000. The bonds mature on March 1, 2023, and pay interest on March 1 and September 1. Hauke sells 3,000 bonds on September 1, 2019, for $2,964,000, after the interest has been received. Hauke uses straight-line amortization. The gain on the sale is a. $0. b. $14,400. c. $24,000. d. $33,600.

a

During 2017, Woods Company purchased 80,000 shares of Holmes Corporation common stock for $1,260,000 as an equity investment. The fair value of these shares was $1,200,000 at December 31, 2017. Woods sold all of the Holmes stock for $17 per share on December 3, 2018, incurring $56,000 in brokerage commissions. Woods Company should report a realized gain on the sale of stock in 2018 of a. $44,000. b. $100,000. c. $104,000. d. $160,000.

D

During 2018 Logic Company purchased 10,000 shares of Midi, Inc. for $30 per share. During the year Logic Company sold 2,500 shares of Midi, Inc. for $35 per share. At December 31, 2018 the market price of Midi, Inc.'s stock was $28 per share. What is the total amount of unrealized gain/(loss) that Logic Company will report in its income statement for the year ended December 31, 2018 related to its investment in Midi, Inc. stock? a. ($20,000) b. $12,500 c. ($7,500) d. ($2,500)

a

Harrison should report investment revenue for 2018 of a. $480,000. b. $384,000. c. $96,000. d. $0.

b

How much investment income should Dexter report in 2018? a. $240,000. b. $216,000. c. $144,000. d. $720,000.

c

If Blanco Company used the fair value method of accounting for its investment in Darby Company, its Equity Investments (Darby) account on December 31, 2018 should be a. $580,000. b. $660,000. c. $600,000. d. $680,000.

c

If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Equity Investments (Darby) account at December 31, 2018 should be a. $580,000. b. $600,000. c. $660,000. d. $680,000.

b

If Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2018 for $290,000 and during 2019 Dobbs Company had net income of $150,000 and paid a cash dividend of $60,000, applying the fair value method would give a debit balance in the Equity Investments (Dobbs) account at the end of 2019 of a. $230,000. b. $290,000. c. $320,000. d. $308,000.

c

If Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2018 for $350,000 and the fair value method of accounting for the investment were used, the amount of the debit to Equity Investments (Dobbs) would have been a. $278,000. b. $230,000. c. $350,000. d. $360,000.

b

If Goebel Company acquired a 30% interest in Dobbs Company on December 31, 2018 for $430,000 and the equity method of accounting for the investment were used, the amount of the debit to Equity Investments (Dobbs) would have been a. $540,000. b. $430,000. c. $345,000. d. $417,000.

b

If Goebel Company acquired a 30% interest in Dobbs Company on December 31, 2018 for $440,000 and during 2019 Dobbs Company had net income of $150,000 and paid a cash dividend of $60,000, applying the equity method would give a debit balance in the Equity Investments (Dobbs) account at the end of 2019 of a. $440,000. b. $467,000. c. $485,000. d. $422,000.

c

If the beginning balance in the investment account was $750,000, the balance at December 31, 2018 should be a. $1,230,000. b. $990,000. c. $846,000. d. $750,000.

B

Instrument Corporation has the following investment which was held throughout 2018-2019: Fair Value Cost 12/31/18 12/31/19 Equity investment $900,000 $1,200,000 $1,140,000 What amount of gain or loss would Instrument Corporation report in its income statement for the year ended December 31, 2019 related to its investment? a. $60,000 gain. b. $60,000 loss. c. $300,000 gain. d. $240,000 gain.

b

Kern Company purchased bonds with a face amount of $1,000,000 between interest payment dates. Kern purchased the bonds at 102, paid brokerage costs of $15,000, and paid accrued interest for three months of $25,000. The amount to record as the cost of this long-term investment in bonds is a. $1,060,000. b. $1,035,000. c. $1,020,000. d. $1,000,000.

C

Kramer Company's equity securities portfolio which is appropriately included in current assets is as follows: December 31, 2018 Fair Unrealized Cost Value Gain (Loss) Catlett Corp. $260,000 $215,000 $(45,000) Lyman, Inc. 245,000 265,000 20,000 $505,000 $480,000 $(25,000) Ignoring income taxes, what amount should be reported as a charge against income in Kramer's 2018 income statement if 2018 is Kramer's first year of operation? a. $0. b. $20,000 gain. c. $25,000 loss. d. $45,000 loss.

c

Myers Company acquired a 60% interest in Gannon Corporation on December 31, 2017 for $1,775,000. During 2018, Gannon had net income of $1,000,000 and paid cash dividends of $250,000. At December 31, 2018, the balance in the investment account should be a. $1,775,000. b. $2,375,000. c. $2,225,000. d. $2,525,000.

c

On August 1, 2018, Dambro Company acquired 1,200, $1,000, 9% bonds at 97 plus accrued interest. The bonds were dated May 1, 2018, and mature on April 30, 2024, with interest paid each October 31 and April 30. The bonds will be added to Dambro's available-for-sale portfolio. The preferred entry to record the purchase of the bonds on August 1, 2018 is a. Debt Investments 1,191,000 Cash 1,191,000 b. Debt Investments 1,164,000 Interest Receivable 27,000 Cash 1,191,000 c. Debt Investments 1,164,000 Interest Revenue 27,000 Cash 1,191,000 d. Debt Investments 1,200,000 Interest Revenue 27,000 Discount on Debt Investments 36,000 Cash 1,191,000

a

On August 1, 2018, Fowler Company acquired $500,000 face value 10% bonds of Kasnic Corporation at 104 plus accrued interest. The bonds were dated May 1, 2018, and mature on April 30, 2023, with interest payable each October 31 and April 30. The bonds will be held to maturity. What entry should Fowler make to record the purchase of the bonds on August 1, 2018? a. Debt Investments 520,000 Interest Revenue 12,500 Cash 532,500 b. Debt Investments 532,500 Cash 532,500 c. Debt Investments 532,500 Interest Revenue 12,500 Cash 520,000 d. Debt Investments 500,000 Premium on Bonds 32,500 Cash 532,500

b

On January 2, 2018 Pod Company purchased 25% of the outstanding common stock of Jobs, Inc. and subsequently used the equity method to account for the investment. During 2018 Jobs, Inc. reported net income of $1,260,000 and distributed dividends of $540,000. The ending balance in the Investment in Pod Company account at December 31, 2018 was $960,000 after applying the equity method during 2018. What was the purchase price Pod Company paid for its investment in Jobs, Inc? a. $510,000 b. $780,000 c. $1,140,000 d. $1,410,000

a

On November 1, 2018, Horton Company purchased Lopez, Inc., 10-year, 9%, bonds with a face value of $800,000, for $720,000. An additional $24,000 was paid for the accrued interest. Interest is payable semiannually on January 1 and July 1. The bonds mature on July 1, 2025. Horton uses the straight-line method of amortization. Ignoring income taxes, the amount reported in Horton's 2018 income statement as a result of Horton's available-for-sale investment in Lopez was a. $14,000. b. $13,333. c. $12,000. d. $10,667.

c

On November 1, 2018, Howell Company purchased 1,000 of the $1,000 face value, 9% bonds of Ramsey, Incorporated, for $1,052,500, which includes accrued interest of $15,000. The bonds, which mature on January 1, 2023, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the straight-line method of amortization and that the bonds are appropriately classified as available-for-sale, the net carrying value of the bonds should be shown on Howell's December 31, 2018, balance sheet at a. $1,000,000. b. $1,037,500. c. $1,036,000. d. $1,052,500.

b

On October 1, 2018, Menke Company purchased to hold to maturity, 500, $1,000, 9% bonds for $520,000. An additional $15,000 was paid for accrued interest. Interest is paid semiannually on December 1 and June 1 and the bonds mature on December 1, 2022. Menke uses straight-line amortization. Ignoring income taxes, the amount reported in Menke's 2018 income statement from this investment should be a. $11,250. b. $10,050. c. $12,450. d. $13,650.

b

On October 1, 2018, Renfro Company purchased to hold to maturity, 4,000, $1,000, 9% bonds for $3,960,000 which includes $60,000 accrued interest. The bonds, which mature on February 1, 2027, pay interest semiannually on February 1 and August 1. Renfro uses the straight-line method of amortization. The bonds should be reported in the December 31, 2018 balance sheet at a carrying value of a. $3,900,000. b. $3,903,000. c. $3,960,000. d. $3,961,750.

D

On its December 31, 2017, balance sheet, Trump Company reported its investment in equity securities, which had cost $600,000, at fair value of $560,000. At December 31, 2018, the fair value of the securities was $585,000. What should Trump report on its 2018 income statement as a result of the increase in fair value of the investments in 2018? a. $0. b. Unrealized loss of $15,000. c. Realized gain of $25,000. d. Unrealized gain of $25,000.

a

The amount of unrealized loss to appear as a component of comprehensive income for the year ending December 31, 2018 is a. $40,000. b. $30,000. c. $20,000. d. $0.

b

The following information relates to Windom Company for 2018: Realized gain on sale of available-for-sale debt securities $45,000 Unrealized holding gains arising during the period on available-for-sale debt securities 90,000 Reclassification adjustment for gains included in net income 30,000 Windom's 2018 comprehensive income is a. $75,000. b. $105,000. c. $135,000. d. $165,000.

c

What amount should Dexter show in the investment account at December 31, 2018 if the beginning of the year balance in the account was $960,000? a. $1,176,000. b. $960,000. c. $1,104,000. d. $1,440,000.