On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company

Question

On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company for $162,000 plus a broker's fee of $4,400. Convell Company has a total of 67,500 shares of common stock outstanding and It is presumed the Barber Company will have a significant Influence over Convell. During each of the next two years, Convell declared and pald cash dividends of $0.75 per share, and Its net Income was $123,000 and $118,000 for Year 1 and Year 2, respectively. The January 12, Year 3, entry to record Barber's sale of 8100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $109,350 cash should be: Multiple Cholce Deblt Cash $109,350; debit Loss on Sale of Investment $57050; credit Long-Term Investments Debit Cash $109,350: debit Loss on Sale of Investment $20,250: credit Long-Term Investments $129,600. Debit Cash $109,350: debit Loss on Sale of Investment $7.260: credit Long-Term Investments $116.610. Debit Cash $109,350; credit Galn on Sale of Investment $9.510: credit Long-Term Investments $99.840. Debit Cash $109,350: credit Galn on Sale of Investment $20.250: credit Long-Term Investments

Explanation / Answer

investment 162,000 Add Brokers fee 4,400 166,400 less :Dividend (.75*2*13500) -20250 146,150 Add:net income (123000+118000)*20%= 48200 total investment at year end 194,350 cost of 8100 shares sold 194,350/13500*8100 116610 hence the correct option is C Debit cash $109,350 ; debit loss on sale of investments 7,260 ;credit long term investments $116,610

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.