Multiple Choice О Debit Cash $68,850; debit Loss on Sale of Investment $6,420; credit Equity Method Investments $75,270. О Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $81,600. Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $56,100.
Multiple Choice О Debit Cash $68,850; debit Loss on Sale of Investment $6,420; credit Equity Method Investments $75,270. О Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $81,600. Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $56,100.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 4, Year 1, Barber Company purchased 8,500 shares of Convell Company for $102,000. Convell Company has a total of 42,500 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 paid cash dividends of $0.75 per share, and its net income was $93,000 and $88,000 for Year 1 and Year 2, respectively.
The January 2, Year 3, entry to record Barber's sale of 5,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for
$68,850 cash, should be:
Multiple Choice
О
Debit Cash $68,850; debit Loss on Sale of Investment $6,420; credit Equity Method Investments $75,270.
О
Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $81,600.
Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $56,100.
Debit Cash $68,850; debit Loss on Sale of Stock Investment $35,550; credit Equity Method Investments $102,000.
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