On April 1, 2025, Promise Company purchased 150,000 common shares in Delta Co. for $7 per share. The total number of common shares outstanding for Delta Co is 3.1 million. The management of Promise Co. needs to store itS cash in an investment and it believes that the market will eventually recover in a couple years and it might sell at that time. Delta Co. paid no dividends during the year and on December 31, 2025 its shares were trading at $6.65 per share. Management does not view investing as part of its operations.
On April 1, 2025, Promise Company purchased 150,000 common shares in Delta Co. for $7 per share. The total number of common shares outstanding for Delta Co is 3.1 million. The management of Promise Co. needs to store itS cash in an investment and it believes that the market will eventually recover in a couple years and it might sell at that time. Delta Co. paid no dividends during the year and on December 31, 2025 its shares were trading at $6.65 per share. Management does not view investing as part of its operations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:Scenario B: Use the information above for Promise Cormpany's investment in Delta
Co. to complete the following journal entries:
Select the dollar amount that Promise Company. would record in the December 31
journal entry. (Hint: both sides of the JE are the same $ amnount.)
14
15
18
a) $1,050,000
b) $997,500
21
c) $52,500
24
d) $712,137
e) $337,862
O f) None of the above

Transcribed Image Text:Investment Scenario B
On April 1, 2025, Promise Company purchased 150,000 common shares in Delta Co.
for $7 per share. The total number of common shares outstanding for Delta Co is 3.1
million. The management of Promise Co. needs to store its cash in an investment and
it believes that the market will eventually recover in a couple years and it might sell
at that time. Delta Co. paid no dividends during the year and on December 31, 2025
its shares were trading at $6.65 per share. Management does not view investing as
part of its operations.
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