Question

At the beginning of the? year, joan? steel, inc. purchased? 10,000 shares of smith? metals, inc. for? $34,000 in exchange for cash and now holds? 3.2% of the voting stock of smith? metals, inc. the management of joan steel intends to hold this stock for two years. assuming no other transaction happened during the? year, the? ________ in the balance sheet will increase.
a. ?long-term investments

b. current assets

c. cash

d. total assets

Answer 1

Assuming no other transaction happened during the year, the long term investments in the balance sheet will increase. The answer is letter A.This is because Joan already purchased 10,000 shares of Smith Metals Inc. for $34,000 in exchange for cash and at the same time, she holds 3.2% of the voting stock of Smith Metals Inc. Also, Joan's company, Steel Inc.  wanted o hold the stocks for two years.