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58. Long-term investments:

A. Are current assets. B. Include funds earmarked for a special purpose such as bond sinking funds.C. Must be readily convertible to cash.

D. Are expected to be converted into cash within one year.

E. Include only equity securities.59. Short-term investments:

AAre securities that management intends to convert to cash withinthe longer of one year or the current . operating cycle, and arereadily convertible to cash. B. Include funds earmarked for a special purpose such as bond sinking funds.

C. Include stocks not intended to be converted into cash. D. Include bonds not intended to be converted into cash. E. Include sinking funds not intended to be converted into cash.

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60. Long-term investments are reported in the:

A. Current asset section of the balance sheet. B. Intangible asset section of the balance sheet.C. Non-current section of the balance sheet called long-terminvestments.

D. Plant assets section of the balance sheet.

E. Equity section of the balance sheet.

61. Long-term investments include: A. Investments in bonds and stocks that are not readily convertibleto cash.

B. Investments in marketable stocks that are intended to beconverted into cash in the short-term.

C. Investments in marketable bonds that are intended to be

converted into cash in the short-term. D. Only investments readily convertible to cash. E. Investments intended to be converted to cash within one year.

62. NSC Corporation has invested in 10% of the outstanding stock of

VC Corporation. NSC intends to actively manage this investment for profit. This investment is classified as: A. an available-for-sale security.

B. a held-to-maturity security.C. a trading security.

D. a significant influence security. E. a controlling influence security.

63. All of the following statements regarding equity securities are Trueexcept:

A. Equity securities should be recorded at cost when acquired. B. Equity securities are valued at fair value if classified as trading securities.C. Equity securities are valued at fair value if classified as

significant influence securities. D. Equity securities are valued at fair value if classified asavailable-for-sale securities.

E. Equity securities classified as available-for-sale record the

dividend revenue when received.64 Debt securities:

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A. Can be short-term investments. B. Can be long-term investments.C. Can have a cost higher than the maturity value of the debt

security. D. Can have a cost lower than the maturity value of the debt security.

E. All of these.65. At acquisition, debt securities are:

A. Recorded at their cost, plus total interest that will be paid over the life of the security.

B. Recorded at the amount of interest that will be paid over the lifeof the security.C. Recorded at cost.

D. Not recorded, because no interest is due yet. E. Recorded at cost plus the amount of dividend income to be

received.

66. At the end of the accounting period, the owners of debt securities: A. Must report the dividend income accrued on the debt securities. B. Must retire the debt.C. Must record a gain or loss on the interest income earned.

D. Must record a gain or loss on the dividend income earned. E. Must record any interest earned on the debt securities.

67. A company owns 9% bonds with a par value of $100,000 that payinterest on October 1 and April 1. The amount of interest accrued on

December 31 (the company's year-end) would be: A. $750. B. $1,500.C. $2,250.

D. $4,500. E. $9,000.

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68. Everrine Corporation owns 3,000 shares of JRW Corporation.

JRW Corporation has 25,000 shares of stock outstanding. JRW paid $4 per share in cash dividends to its stockholders. The entry torecord the receipt of these dividends is: A. Debit Cash, $12,000; credit Long-Term Investments, $12,000. B. Debt Long-Term Investment, $12,000; credit Cash, $12,000.C. Debit Cash, $12,000; credit Dividend Revenue, $12,000.

D. Debit Unrealized Gain-Equity, $12,000; credit Cash, $12,000. E. Debit Cash, $12,000; credit Unrealized Gain-Equity, $12,000.

69. A company purchased $60,000 of 5% bonds on May 1 at par value.The bonds pay interest on February 1 and August 1. The amount of interest accrued on December 31 (the company's year-end) would be: A. $250. B. $500.C. $1,250.

D. $2,500. E. $3,000.

70. A company paid $37,800 plus a broker's fee of $525 to acquire 8%bonds with a $40,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receivewhenthe bonds mature equal: A. $37,800. B. $38,325.C. $40,000.

D. $40,525. E. $43,200.

71. An investor purchased at par value $75,000 of Cort's 8% bonds, that mature in three-years. The bonds pay interest semiannually on June 1and December 1. The investor plans to hold the bonds until theymature. When the bonds mature, the investor should prepare the

following journal entry: A. debit Long-Term Investments-HTM, $75,000; credit Cash,$75,000.B debit Cash $6 000; credit Unrealized Gain Equity $6 000

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C. debit Cash, $75,000; credit Long-Term 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.

72. Griggs Company holds $50,000 of 8% bonds as a held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment? A. debit Cash, $4,000; credit Long-Term Investments — HTM,$4,000.

B. debt Cash, $2,000; credit Long-Term Investments — HTM, $2000.C. debit Cash, $2,000; credit Interest Revenue, $2,000.

D. debit Unrealized Gain-Equity, $2,000; credit Cash, $2,000. E. debit Cash, $4,000; credit Unrealized Gain-Equity, $4,000.

73. Accounting for long-term investments in equity securities withcontrolling influence uses the:

A. Controlling method. B. Equity method with consolidation.C. Investor method.

D. Investment method.

E. Consolidated method.

74. The controlling investor is called the: A. Owner. B. Subsidiary.C. Parent.

D. Investee. E. Senior entity.

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75. A controlling influence over the investee is based on the investor owning voting stock exceeding:

A. 10%.

B. 20%.C. 30%.

D. 40%. E. 50%.

76. Long-term investments can include: A. Held-to-maturity debt securities. B. Available-for-sale debt securities.C. Available-for-sale equity securities.

D. Equity securities giving an investor significant influence over

an investee. E. All of these.

77. Consolidated financial statements: A. Show the results of operations, cash flows, and the financial

position of all entities under a parent's control. B. Show the results of operations, cash flows, and the financial

position of the parent only.C. Show the results of operations, cash flows, and the financial

position of the subsidiary only. D. Include the investments account on the balance sheet. E. Do not include a balance sheet.

78. Comprehensive income includes A. Revenues and expenses reported in the income statement. B. Gains and losses reported in the income statement.C. Unrealized gains and losses on long-term available-for-sale

securities. D. All changes in equity for a period except those due toinvestments and distributions to owners.

E. All of these.

79. Short-term investments in held-to-maturity debt securities areaccounted for using the:

A. Fair value method with fair value adjustment to income.B F i l th d ith f i l dj t t t it

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D. Cost method without amortization. E. Equity method.

80. Long-term investments in held-to-maturity debt securities areaccounted for using the:

A. Fair value method with fair value adjustment to income. B. Fair value method with fair value adjustment to equity.C. Cost method with amortization.

D. Cost method without amortization. E. Equity method.

81. The price of one currency stated in terms of another currency iscalled a(n):

A. Foreign exchange rate. B. Currency transaction.C. Historical exchange rate.

D. International conversion rate. E. Currency rate.

82. All of the following statements relating to accounting for international operations are True except:

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 areaccumulated in the Foreign Exchange Gain (or Loss) account.

D. The balance in the Foreign Exchange Gain (or Loss) account isreported on the income statement.

E. Foreign exchange gains or losses can occur when accounting for

international purchases transactions.

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83. Foreign exchange rates fluctuate due to changes in:

A. Political conditions. B. Economic conditions.C. Supply and demand for currencies.

D. Expectations of future events. E. All of these.

84. The currency in which a company presents its financial statementsis known as the:

A. Multinational currency. B. Price-level-adjusted currency.C. Specific currency.

D. Reporting currency. E. Historical cost currency.

85. If the exchange rate for Canadian and U.S. dollars is 0.82777 to1, this implies that 3 Canadian dollars will buy ____ worth of U.S.dollars. A. $0.2759 B. $0.82777 C. $1.82777

D. $2.48 E. None of these.

86. Breanna Boutique purchased on credit £50,000 worth of clothing from a British company when the exchange rate was $1.97 per British pound. At the year-end balance sheet date the exchangerate increased to $2.76. Breanna Boutique must record a: A. gain of $39,500. B. loss of $39,500.C. gain of $138,000.

D. loss of $138,000. E. neither a gain nor loss.

87. Rosser Company sold supplies in the amount of 25,000 euros to a French company when the exchange rate was $1.21 per euro. At the time of payment, the exchange rate decreased to $0.82. Rosser must record a: A. gain of $9,750. B. gain of $20,500.C. loss of $9,750.

D. loss of $20,500. E. neither a gain nor loss.

88. Select the correct statement from the following: A. Profit margin reflects a company's ability to produce net sales from total assets. B. Total asset turnover reflects the percent of net income in eachdollar of net sales.C. Return on total assets can be separated into gross margin ratioand price-earnings ratio.

D. High returns on total assets are desirable. E. Return on total assets analysis is beneficial in evaluating a

company but is not useful for competitor analysis.89. Doherty Corporation had net income of $30,000, net sales of

$1,000,000, and average total assets of $500,000. Its return ontotal assets is: A.3%

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B.200%C.6% D. 17% E. 1.5%

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90. A company has net income of $250,000, net sales of $2,000,000,

and average total assets of $1,500,000. Its return on total assetsequals: A. 12.5%. B. 13.3%.

C. 16.7%.

D. 75.0%. E. 600.0%.

91. A company had net income of $2,660,000, net sales of $25,000,000, and average total assets of $8,000,000. Its returnon total assets equals: A. 3.01%. B. 10.64%.

C. 32.00%. D. 33.25%. E. 300.75%.

92. A company had net income of $43,000, net sales of $380,500, and average total assets of $220,000. Its profit margin and total asset turnover were, respectively:

A. 11.3%; 1.73. B. 11.3%; 19.5.C. 1.7%; 19.5.

D. 1.7%; 11.3. E. 19.5%; 11.3.

93. A company had a profit margin of 10.5% and total asset turnover of 1.84. Its return on total assets

was:

A. 5.71% B. 8.66%C. 12.34%

D. 13.61% E. 19.32%

94. A company had net income of $40,000, net sales of $300,000, and

average total assets of $200,000. Its profit margin and total asset

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turnover were respectively: A. 13.3%; 0.2. B. 13.3%; 1.5.C. 2.0%; 1.5.

D. 1.5%; 0.2. E. 1.5%; 13.3.

95. Investments can be classified as: A. Trading securities. B. Held-to-maturity debt securities.C. Available-for-sale debt securities.

D. Available-for-sale equity securities. E. All of these.

96. Investments in debt and equity securities that the company actively

manages and trades for profit are referred to as short-terminvestments in:

A. Available-for-sale securities. B. Held-to-maturity securities.C. Trading securities.

D. Realizable securities. E. Liquid securities.

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97. Investments in trading securities:

A. Include only equity securities. B. Are reported as current assets.C. Include only debt securities.

D. Are reported at their cost, no matter what their market value. E. Are long-term investments.

98. A decrease in the fair value of a security that has not yet beenrealized through an actual sale of the security is called a(n): A. Contingent loss. B. Realizable loss.

C. Unrealized loss. D. Capitalized loss. E. Market loss.

99. Held-to-maturity securities are: A. Always classified as Long-Term Liabilities. B. Always classified as Long-Term Investments.C. Debt securities that a company intends and is able to hold tomaturity.

D. Equity securities that a company intends and is able to hold tomaturity.

E. Equity securities that have a maturity value greater than cost.

1 00.Available-for-sale debt securities are: A. Recorded at cost and remain at cost over the life of the

investment. B. Reported at historical cost, adjusted for the amortized amount of

any difference between cost and maturity value.C. Reported at fair value on the balance sheet.

D. Intended to be held to maturity. E. Always classified with Long-Term Liabilities.

101 .Available-for-sale equity securities: A. Are recorded at cost when acquired. B. May earn dividends that are reported in that year's income statement.C. May be classified as either short-term or long-term securities.

D. Are reported at market value on the balance sheet.

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E. All of these.

102.Morgan Company purchased 2,000 shares of Asta's common stock for $143,000 as a long-term investment. The investment is classified as available-for-sale securities. The par value of the stock was $1 per

share. Morgan paid $375 in commissions on the transaction. Theentry to record the transaction would include a: A. Credit to Common Stock for $2,000. B. Credit to Common Stock for $143,000.C. Credit to Common Stock for $143,375.

D. Debit to Long-Term Investments-AFS for $143,000. E. Debit to Long-Term Investments-AFS for $143,375.

103.Six months ago, a company purchased an investment in stock for $65,000. The investment is classified as

available-for-sale securities. The current fair value of the stock is$68,500. The company should record

a: A. Debit to Unrealized Loss-Equity for $3,500. B. Credit to Unrealized Gain-Equity for $3,500.C. Debit to Investment Revenue for $3,500.

D. Credit to Market Adjustment - Available-for-Sale for $3,500.

E. Credit to Investment Revenue for $3,500.

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104.On July 31, Beatrice Co. purchased 2,000 shares of SimmTech

stock for $16,000. The investment is classified as available-for-sale securities. On October 31, which is Beatrice's year-end, the stock had a fair value of $20,000. Beatrice should record a: A. Credit to Unrealized Gain-Equity for $4,000. B. Credit to Market Adjustment - Available-for-Sale for $4,000.C. Credit to Investment Revenue for $4,000.

D. Debit to Investment Revenue for $4,000. E. Debit to Unrealized Gain-Equity for $4,000.

105.On March 15, Carter Company purchased 10,000 shares of Tonya Corp. stock for $35,000. The investment is classified asavailable-for-sale securities. On June 30, the stock had a fair value of $38,000. Carter should do all of the following except: A. Record an increase to the Fair value Adjustment-AFS account. B. Record an increase to the Unrealized Gain - Equity account.C. Report the increase in the equity section of the balance sheet.

D. Report the increase in the asset section of the balance sheet. E. Record an increase to the Unrealized Gain - Income account.

106.If a company owns more than 20% of the stock of another companyand the stock is being held as a longterm investment, which method would the investor normally use to account for this investment? A. Equity method. B. Fair value method.C. Historical cost method.

D. Cost with amortization method. E. Effective method.

107.Vans purchased 40,000 shares of Skechs common stock for $232,000. This represents 40% of the outstanding stock. Theentry to record the transaction includes a: A. Debit to Long-Term Investments for $92,800. B. Debit to Long-Term Investments for $232,000.C. Credit to Long-Term Investments for $92,800.

D. Debit to Long-Term Investments-HTM for $232,000. E. Debit to Short-Term Investment-AFS for $232,000.

108.Micron owns 35% of Martok. Martok pays a total of $47,000 inh di id d f h i d Mi ' d h di id d

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A. Credit to Long-Term Investments for $16,450. B. Debit to Long-Term Investments for $16,450.C. Debit to Cash for $47,000.

D. Credit to Cash for $16,450. E. Credit to Investment Revenue for $47,000.

109.Chung owns 40% of Lu's common stock. Lu pays $97,000 in total cash dividends to its shareholders. Chung's entry to record thistransaction should include a: A. Debit to Dividends for $97,000. B. Debit to Dividends for $38,800.C. Debit to Long-Term investments for $97,000.

D. Credit to Long-Term Investments for $38,800. E. Credit to Cash for $97,000.

1 10.Hamilton Company owns 51,000 of Hennie Company's 100,000outstanding shares of common stock. Hennie Company pays $25,000in total cash dividends to its shareholders. Hamilton's entry to record this transaction should include a: A. Debit to Dividend Revenue for $12,750. B. Debit to Interest Revenue for $12,750.C. Credit to Long-Term investments for $12,750.

D. Credit to Long-Term Investments for $25,000. E. Credit to Dividend Revenue for $25,000.

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11 1.Parris Corporation purchased 40% of Samitz Corporation for $100,000 on January 1. On November

17 of the same year, Samitz Corporation declared total cashdividends of $12,000. At year-end, Samitz Corporation reported net income of $60,000. The balance in the Parris Corporation's Long-Term Investment-Samitz account at December 31 should be: A. $80,800. B. $100,000.C. $95,200.

D. $119,200. E. $124,000.

1 12.Clark Corporation purchased 40% of IT Corporation for $125,000on January 1. On May 20 of the same year, IT Corporation declared

total cash dividends of $30,000. At year-end, IT Corporationreported net income of $150,000. The balance in Clark Corporation's Long-Term Investment-IT Corporation account as of

December 31 should be: A. $77,000. B. $125,000.C. $173,000.

D. $197,000. E. $370,000.

1 13.Everrine Corporation owns 30% of JRW Corporation. EverrineCorporation received $9,000 in cash dividends from JRW Corporation. The entry to record receipt of these dividends is: A. Debit Cash, $9,000; credit Long-Term Investments, $9,000. B. Debt Long-Term Investment, $9,000; credit Cash, $9000.C. Debit Cash, $9,000; credit Interest Revenue, $9,000.

D. Debit Unrealized Gain-Equity, $9,000; credit Cash, $9,000. E. Debit Cash, $9,000; credit Dividend Revenue, $9,000.

114.On January 4, Year1, Larsen Company purchased 5,000 shares of Warner Company for $59,500 plus a broker's fee of $1,000. Warner Company has a total of 25,000 shares of common stock outstanding

and it is presumed the Larsen Company will have a significant influence over Warner. During each of the next two years, Warner d l d d id h di id d f $0 85 h d i

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The January 12, Year 3, entry to record the sale of 3,000 shares of Warner Company stock for $39,000 cash should be: A. Debit Cash $39,000; debit Loss on Sale of Investment $8,200;

credit Long-Term Investments $47,280. B. Debit Cash $39,000; debit Loss on Sale of Investment $8,880;credit Long-Term Investments $47,880.

C. Debit Cash $39,000; credit Gain on Sale of Investment $2,700;credit Long-Term Investments $36,300.

D. Debit Cash $39,000; credit Gain on Sale of Investment $8,750;credit Long-Term Investments $30,250.

E. Debit Cash $39,000; debit Loss on Sale of Investment $21,500;credit Long-Term Investments $60,500.

1 15.A U.S. company makes a sale to a foreign customer payable in 30

days in the customer's currency. The sale would be recorded by theU.S. company on the date: A. Of sale using a projected estimate of the U.S. dollar value at payment date. B. Of sale using a 30-day average U.S. dollar value.C. Of sale using the current dollar value.

D. Of sale using the foreign currency value.

E. When payment is received.11 6.When a credit sale is denominated in a foreign currency, the

foreign exchange rate used to record the sale is the current exchangerate: 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.

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117.On June 18, Johnson Company (a U.S. Company) sold

merchandise to the Frater Company of Denmark for 60,000 Euros,with a payment due in 60 days. If the exchange rate was $1.14 per euro on the date of sale and $1.35 per euro on the date of payment,

Johnson Company should recognize a foreign exchange gain or lossin the amount of:

A. $60,000 gain. B. $60,000 loss.C. $68,400 loss.

D. $12,600 gain. E. $12,600 loss.

118.On November 12, Kendra, Inc., a U.S. Company, sold merchandiseon credit to Nakakura Company

of Japan at a price of 1,500,000 yen. The exchange rate was$0.00837 per yen on the date of sale. On December 31, when Kendra

prepared its financial statements, the exchange rate was $0.00 843. Nakakura Company paid in full on January 12, when the exchangerate was $0.00861. On December 31, Kendra should prepare the

following journal entry: A. Debit Sales $90; credit Foreign Exchange Gain $90.

B. Debit Foreign Exchange Loss $90; credit Sales $90.C. Debit Accounts Receivable-Nakakura Company $90; credit

Foreign Exchange Gain $90. D. Debit Foreign Exchange Loss $90; Accounts Receivable- Nakakura Company $90. E. No journal entry is required until the amount is collected.

119.On November 12, Kera, Inc., a U.S. Company, sold merchandise

on credit to Kakura of Japan at a price of 1,500,000 yen. Theexchange rate was $0.00837 on the date of sale. On December 31,when Kera prepared its financial statements, the exchange rate was$0.00843. Kakura paid in full on January 12, when the exchangerate was $0.00861. On January 12, Kera should prepare the

following journal entry: A. Debit Cash $12,915; credit Accounts Receivable-Kakura

$12,555; credit Foreign Exchange Gain $360. B. Debit Cash $12,555; debit Foreign Exchange Loss $360; credit

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Accounts Receivable-Kakura $12,915.

C. Debit Cash $12,915; credit Accounts Receivable-Kakura $12,645;credit Foreign Exchange Gain $90.

D. Debit Cash $12,645; debit Foreign Exchange Loss $90; credit Accounts Receivable-Kakura $12,915.

E. Debit Cash $12,915; credit Accounts Receivable-Kakura $12,645;

credit Foreign Exchange Gain $270.120.All of the following statements regarding accounting for

noninfluential securities under U.S. GAAP and IFRS are Trueexcept:

A.Trading securities are accounted for using fair values withunrealized gains and losses reported in other comprehensive income.

B. Trading securities are accounted for using fair values with

unrealized gains and losses reported in net income.C Available-for-sale securities are accounted for using fair values with unrealized gains and losses . reported in other comprehensive income. D. Held-to-maturity securities are accounted for using amortized cost.

E. Both systems examine held-to-maturity securities for impairment.

121 .All of the following statements regarding accounting for influential securities under U.S. GAAP and IFRS are True except:

A Under the equity method, the share of investee's net income isreported in the investor's income in the . same period the investeeearns that income.

B. Under the consolidation method, investee and investor revenuesand expenses are combined.

C Under the equity method, the investment account equals theacquisition cost plus the share of investee . income plus the share of investee dividends.

D Under the consolidation method, nonintercompany assets and liabilities are combined (eliminating the . need for an investment account).

EU. S. GAAP companies commonly refer to noncontrolling interests in consolidated subsidiaries as . minority interests

whereas IFRS companies use noncontrolling interests.

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122.All of the following statements regarding accounting for trading

securities under U.S. GAAP are True except: A. The entire portfolio of trading securities is reported at is fair

value. B. An unrealized gain or loss from a change in fair value is reportedon the income statement.C. An unrealized gain or loss is recorded with an adjusting entrywhen the securities are sold.

D. An unrealized gain or loss is recorded with an adjusting entry at the end of each period.

E. Unrealized gains and losses are recorded in a temporary account that is closed to Income Summary at the end of the period.

123.All of the following statements regarding accounting for trading

securities under U.S. GAAP are True except: A. The entire portfolio of trading securities is reported at is fair value. B. An unrealized gain or loss from a change in fair value is reportedon the income statement.C. A realized gain or loss is recorded when the securities are sold and reported on the income statement. D When the period-end fair

value adjustment for the portfolio of trading securities iscomputed, it . includes the cost and fair value of any securities

sold. EWhen the period-end fair value adjustment for the portfolio of trading securities is computed, it . excludes the cost and fair value of any securities sold.

124.All of the following statements regarding other comprehensive

income are True except: A.Other comprehensive income includes unrealized gains and

losses on available-for-sale securities. B. Other comprehensive income is not considered when calculating comprehensive income.C. Other comprehensive income includes foreign currency

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adjustments.

D. Other comprehensive income includes pension adjustments. E. Accumulated other comprehensive income is defined as the

cumulative impact of other comprehensive income.

125.Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value. Interest payments are made semiannually. All of the following regarding accounting for the securities are True except: A. The debt securities should be recorded at the cost $300,000. B. The securities will have a maturity value of $300,000.C. The semiannual interest payment amount is $12,000.

D. The semiannual interest payment amount is $24,000. E. Interest Revenue should be credited when an interest payment isreceived.

126. Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value. Interest payments are made semiannually. Seamark plansto hold the bonds for the five year life. The journal entry to record the purchase should include: A. A debit to Long-Term Investments-AFS $300,000. B. A debit to Short-Term Investments-Trading $300,000.C. A debit to Long-Term Investments-HTM $300,000.

D. A debit to Short-Term Investments-AFS $300,000. E. A debit to Cash $300,000.

127. Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value on September 1. Interest payments are made semiannually on March 1 and September 1. The journal entry toaccrue interest earned at year-end December 31 is: A.

Debit Interest Receivable $8,000, credit Interest Revenue $8,000. B. Debit Interest Receivable $12,000, credit Interest Revenue$12,000.C. Debit Cash $8,000, credit Interest Revenue $8,000.

D. Debit Cash $12,000, credit Interest Revenue $12,000. E. Debit Interest Revenue $8,000, credit Interest Receivable $8,000.

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128.Seamark buys $300,000 of Eider's 8% five-year bonds payable at par

value. Interest payments are made semiannually. Seamark plans tohold the bonds for the five year life. When the bonds mature, the

journal entry to record the proceeds will be: A. Debit Long-Term Investments-HTM $300,000; credit Cash$300,000.

B. Debit Cash $300,000; credit Interest Revenue $300,000.C. Debit Cash $300,000; credit Long-Term Investments-HTM

$300,000. D. Debit Cash $300,000; credit Interest Receivable $300,000. E. Debit Cash $300,000; credit Bonds Payable $300,000.

129.On February 15, Seacroft buys 7,000 shares of Kebo common stockat $28.53 per share plus a brokerage fee of $400. The stock is

classified as available-for-sale securities. On March 15, Kebodeclares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current

year for $29.30 per share less a brokerage fee of $250. The journal entry to record the purchase on February 15 is: A. Debit Long-Term Investments-HTM $199,710; credit Cash

$199,710. B. Debit Long-Term Investments-AFS $199,710; credit Cash$199,710.C. Debit Long-Term Investments-Trading $199,710; credit Cash$199,710.

D. Debit Long-Term Investments-Trading $200,110; credit Cash$200,110.

E. Debit Long-Term Investments-AFS $200,110; credit Cash

$200,110.


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classified as available-for-sale securities. On March 15, Kebodeclares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current

year for $29.30 per share less a brokerage fee of $250. The journal entry to record the dividend on April 15 is:

A. Debit Cash $7,350; credit Dividend Revenue $7,350. B. Debit Cash $8,050; credit Dividend Revenue $8,050.C. Debit Cash $8,050; credit Interest Revenue $8,050.

D. Debit Cash $7,350; credit Interest Revenue $7,350. E. Debit Cash $8,050; credit Gain on Sale of Investments $8,050.


classified as available-for-sale securities. On March 15, Kebodeclares a dividend of $1.15 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of thecurrent year for $29.30 per share less a brokerage fee of $250. The

journal entry to record the sale of the stock on November 17 is: A.Debit Cash $102,300; credit Long-Term Investments-AFS $99,855;

credit Gain on Sale of Long-Term Investments $2,445. B.Debit Cash $102,550; credit Long-Term Investments-Trading

$99,855; credit Gain on Sale of Long- Term Investments $2,645.C.Debit Cash $102,550; credit Long-Term Investments-AFS

$100,055; credit Gain on Sale of Long- Term Investments$2,495.

D.Debit Cash $102,300; credit Long-Term Investments-AFS $100,055; credit Gain on Sale of Long- Term Investments

$2,245. E.Debit Cash $102,300; credit Long-Term Investments-Trading

$99,855; credit Gain on Sale of Long- Term Investments $2,645.

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132.On February 15, Seacroft buys 7,000 shares of Kebocommon stock at $28.53 per share plus a brokerage fee of $400. The stock is classified as available-for-sale

securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on April 15.Seacroft received the dividend on April 15 and ultimately

sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The fair value of the remaining shares is $29.50 per share. Theamount that Seacroft should report on its year-end

December 31 income statement related to the investment in

Kebo is: A. $10,295. B. $8,050.C. $2,245. D. $3,195.

E. $5,440.

133.On February 15, Seacroft buys 7,000 shares of Kebo

common at $28.53 per share plus a brokerage feeof $400. The stock is classified as available-for-sale

securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on

April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage feeof $250. The fair value of the remaining shares is $29.50 per

share. The amount that Seacroft should report in the equity section of its year-end December 31 balance sheet for itsinvestment in Kebo is: A. $10,295. B. $8,050.

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C. $2,245. D. $3,195.

E. $6,390.

134.On February 15, Seacroft buys 7,000 shares of Kebocommon at $28.53 per share plus a brokerage fee

of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.15 per share payable to stockholders of record on

April 15. Seacroft received the dividend on April 15 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The fair value of the remaining shares if $29.50 per

share. The amount that Seacroft should report in the asset section of its year-end December 31 balance sheet for itsinvestment in Kebo is:

A. $200,110. B. $103,250.C. $2,245.

D. $3,195. E. $5,440.

ch15 mc .doc

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