On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company for $162,000. 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 paid 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 2, Year 3, entry to record Barber's sale of 8,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $109,350 cash, should be: Multiple Choice Debit Cash $109,350; debit Loss on Sale of Stock Investment $9,510; credit Equity Method Investments $99,840. Debit Cash $109,350; credit Gain on Sale of Stock Investment $20,250; credit Equity Method Investments $89,100. Debit Cash $109,350; debit Loss on Sale of Stock Investment $57,050; credit Equity Method Investments $162,000. Debit Cash $109,350; debit Loss on Sale of Investment $4,620;
On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company for $162,000. 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 paid 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 2, Year 3, entry to record Barber's sale of 8,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $109,350 cash, should be: Multiple Choice Debit Cash $109,350; debit Loss on Sale of Stock Investment $9,510; credit Equity Method Investments $99,840. Debit Cash $109,350; credit Gain on Sale of Stock Investment $20,250; credit Equity Method Investments $89,100. Debit Cash $109,350; debit Loss on Sale of Stock Investment $57,050; credit Equity Method Investments $162,000. Debit Cash $109,350; debit Loss on Sale of Investment $4,620; credit Equity Method Investments $113,970. Debit Cash $109,350; credit Gain on Sale of Stock Investment $20,250; credit Equity Method Investments $129,600.
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