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PilotLPTM [1.2K]
3 years ago
10

Frisco 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, Frisco Corporation made the following entries: Equity Investment 16,800 Equity Income 16,800 Cash 5,400 Dividend Revenue 5,400 What effect will these entries have on Frisco Corporation's balance sheet? a. Investment understated, retained earnings understated b. Investment overstated, retained earnings understated c. Investment overstated, retained earnings overstated
Business
1 answer:
Soloha48 [4]3 years ago
7 0

Answer:

b. Investment overstated, retained earnings understated

Explanation:

The investment overstated and the retained earnings understated due to the entries because the dividends paid by the investee company  are affecting the retained earning of the Frisco Corp. which correspond to the income of the company and not to the investee.

The investment must be treated as an asset of long term because of the equity method and the income and the dividend had to be record against the Long Term Asset.

In this way Frisco it's recognizing the earning of the investment and it's increase in the participation due to the income of the investee.

Long Term Asset Investee  16.800  Debit

Long Term Asset Investee Revenue  16.800  Credit  

Cash  5.400  Debit

Long Term Asset Investee  5.400  Credit

Net Long Term Asset  11.400  Debit

By this way the Equity and retained earnings of the Frisco Corp are not affected.

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In December, Davis Company had the following cost flows:
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Answer and Explanation:

1. The Journal entry is shown below:-

a. Work in process for Grinding department Dr, $129,400

           To Work in process for Molding department $129,400

(Being transfer the cost to the grinding department is recorded)

b. Work in process for Finishing department Dr, $232,700

            To Work in process for Grinding department $232,700

(Being transfer the cost to the finishing department is recorded)

c. Finished goods Dr, $272,200

          To Work in process-Finishing department $272,200

(Being transfer the cost to the finishing goods is recorded)

2. According to the job order costing, all cost is transferred on one time to the finished goods inventory plus there is no carry forward

On the other side, the process costing is the costing in which all the journal entries are interconnected with each type of department

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3 years ago
Decreasing taxes can stimulate the economy by
just olya [345]

Decreasing taxes can stimulate the economy by putting more money in the circulation or by boosting the spending .The tax cuts stimulate the economic growth only in the short-term.

Explanation:

Due to an decrease in tax the after tax income of an individual increases which is used by individuals to buy more product and services.Thus reduced tax rates leads to an increase in  saving and investment, which leads to an  increase in  the productive capacity of the economy as a whole

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3 years ago
Which step in the STP process develops descriptions of the different segments, which helps firms better understand the customer
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Answer: Step Four - Construct Segments Profile

Explanation:

When practical market segments have been resolved, segment profiles are then created. Segment profiles are point by point depictions of the purchasers in the segments – portraying their needs, behaviors, preferences for the goods, socio economics, shopping styles, etc. This is much similarly that the age accomplices of Baby Boomers, Generation X and Generation Y have a name.

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2 years ago
Which of the following is false regarding residual income? Select one: a. It is similar to ROI in that it takes the size of the
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3 years ago
A group of executives attended a meeting in which the CFO was the attendee with the most senior ranking. When the meeting began,
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Answer:

Group think bias

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Groupthink bias occurs when people believe in something because other people believe in it. It is when everyone comes to the same conclusion concerning a matter.

In the meeting everyone agreed with the CEO, this is an instance of groupthink.

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