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Katarina [22]
3 years ago
10

Fey Corporation uses the equity method of accounting for its investment in a 30%-owned investee that earned $56,000 and paid $18

,000 in dividends.
As a result, Fey Corporation made the following entries:

Equity Investment16,800
Equity Income16,800
Cash5,400
Dividend Revenue5,400

What effect will these entries have on Fey Corporation's balance sheet?

A. Investment understated; retained earnings understated

B. Investment overstated; retained earnings understated

C. Investment overstated; retained earnings overstated

D. No effect
Business
1 answer:
tatiyna3 years ago
6 0

Answer:

The answer is : C. Investment overstated; retained earnings overstated

Explanation:

Under the equity method of accounting, Fey Corporation should record the correct entry as below:

Dr Equity Investment 16,800

Cr Equity Income 16,800

Dr Cash 5,400

Cr Equity Investment 5,400

As a result, Investment account has been overstated by $5,400 while Dividend Revenue account has been overstated by $5,400. The overstating in Dividend Revenue will subsequently result to the overstating in Retained Earnings account through closing entry.

So, C. Investment overstated; retained earnings overstated is the correct answer.

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6 0
1 year ago
Chandler Kumar owns two antique stores. One is in an upscale neighborhood, and its merchandise is artfully arranged and priced t
Sladkaya [172]

Answer:

Positioning strategies

Explanation:

In business , positioning strategies refers to the efforts that a company can do  to influence some sort of perception toward their brands.

In the example above, Markup artfully arranged  his products and priced to indicate product rarity in upscale neighborhood.

He did this because for customers with high economic power, presentation of a certain product will create the perception that owning that product indicates high social status. This probably held more value compared to the actual use function of the product itself.

On the other hand, he left his products in open boxes and placed haphazardly on shelves when targeting customers with lower income. He did this because among customers with lower income, presentation tend to matter less compared to the actual function of thier brand.

8 0
3 years ago
Suppose that the price of a rental car (Prc) is $50 while the price of a flight (Pfl) is $85. Also, suppose that the marginal ut
Masteriza [31]

Answer:

Consumers should choose to take the flight.

Explanation:

The price of a rental car = $50

Marginal utility from the car = 20 utils

Now find the per dollar utility from car = $50 / 20 = 2.5

The price of a flight = $85

Marginal utility from the flight = 30 utils

Now find the per dollar utility from flight = $85 / 30 = 2.83

Since the per dollar, MU is greater in the case of flight so consumers should choose to take the flight.

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3 years ago
Borderline Cafeterias has discovered that most of its wait staff are white, while most of its kitchen staff are hispanic. When i
Elenna [48]

Answer:

disparate impact

Explanation:

Disparate impact refers to practices followed in employment, housing, and other areas that affect one group of people more than the another group, although rules applied by employers are neutral.

Disparate impact explains employment discrimination on the basis of the effect of an employment policy or practice.

In the given questions, the CEO's argument is an example of <u>disparate impact .</u>

6 0
3 years ago
Following is selected financial information from General Mills, Inc., for its fiscal year ended May 29, 2016 ($ millions):
mojhsa [17]

Answer:

General Mills, Inc.

1. Income Statement for the fiscal year ended May 29, 2016:

Revenue                    $16,563.1

Cost of goods sold   $10,733.6

Gross profit                $5,829.5

Total expenses          $4,092.7

Net Income                 $1,736.8

2. General Mills, Inc. Balance Sheet for the fiscal year ended May 29, 2016:

Cash                             $763.7

Non-cash assets      20,948.6

Total assets             $21,712.3

Total liabilities          16,405.2

Stockholders' equity 5,307.1

Total Liab. + equity $21,712.3

3. General Mills, Inc. Statement of Cash Flows for the fiscal year ended May 29, 2016:

Cash from operating activities    $2,629.8

Cash from investing activities             93.4

Cash from financing activities*     (2,293.7)

Net Cash Flows                               $429.5

Cash, beginning year                        334.2

Cash, ending year                           $763.7

Explanation:

a) Interestly, General Mills, Inc.'s income statement shows the financial performance (profit points) of the company when revenue is compared with the cost of goods sold and the expenses.  The first profit point is the gross profit, which is the difference between revenue and cost of goods sold.   The second profit point is the net income, which is the difference between the gross profit and the expenses incurred for the period in running the business.

b) On the other hand, General Mills, Inc.'s balance sheet shows the financial position of the company.  They show what the business owns (assets) and what it owes (liabilities) outsiders and the owners of the company (equity).

c) While, General Mills, Inc.'s statement of cash flows shows the cash flows from operating, financing, and investing activities of the company, and the net cash flows for the period, which can be reconciled to the beginning cash to obtain the ending cash balance.

6 0
3 years ago
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