Brooks Corporation owns 40% of the common stock of the Fairmont Corp. as a long-term investment Company and exercises a significant influence over its operating and financing policies. The stock was purchased on January 1, of the current year, for a total cost of $150,000. At end of the current calendar, Fairmont reports net income of $60,000 and pays $50,000 in dividends to its common stockholders. As a result of these transactions, what’s the ending balance in the “Investment in Fairmont Corp. Common Stock” account at December 31, of the current year on Brook’s books? a) $150,000 b) $174,000
1) Brooks Corporation owns 40% of the common stock of the Fairmont Corp. as a long-term investment Company and exercises a significant influence over its operating and financing policies. The stock was purchased on January 1, of the current year, for a total cost of $150,000. At end of the current calendar, Fairmont reports net income of $60,000 and pays $50,000 in dividends to its common stockholders. As a result of these transactions, what’s the ending balance in the “Investment in Fairmont Corp. Common Stock” account at December 31, of the current year on Brook’s books?
a) $150,000
b) $174,000
c) $154,000
d) $194,000
2) Longspur Corporation purchases 200 shares of Logan Corp. common stock as an investment for $3,500 plus commission of $250 and transfer taxes of $75. What amount would Longspur debit to its investment account as the cost of Logan Corp. stock?
a) $3,750
b) $3,575
c) $3,500
d) $3,825
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