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slamgirl [31]
3 years ago
9

Assume that Horicon Corp acquired 25% of the common stock of Sheboygan Corp. on January 1 for $300,000. During the year Sheboyga

n Corp. reported net income of $160,000 and paid total dividends of $60,000. What entry would Horicon make to record the receipt of the dividend from Sheboygan?
A. Debit Cash and credit Revenue from Investment in Sheboygan Corp.
B. Debit Dividends and redit Revenue from Investment in Sheboygan Corp.
C. Debit Cash and credit Stock Investments
D. Debit Cash and credit Dividend Revenue.
Business
1 answer:
Misha Larkins [42]3 years ago
3 0

Answer:

Option C. Debit Cash and credit Stock Investments

Explanation:

The reason is that in the equity method of recording the dividends receipts, it is always deducted from the stock investment and the relevant share of reported net income of the associate is added to the stock investment.

So mathematically,

Stock Investment Under Equity Method = Opening Value for the year + Share of Net Income - Dividend received

Stock Investment Under Equity Method = $300,000 + $160,000 * 25% + $60,000 * 25% = $325,000

The above treatment shows that the recording of dividends include credit to stock investment and the cash receipt is always debited.

So the double entry would be:

Dr Cash $15,000

Cr Dividends $15,000

So the option C is correct.

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St Vincent St Mary High

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3 years ago
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In the cleveland custom cabinets case, the owner of the company thought it was all right to manipulate the financial statement n
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In the Cleveland custom cabinets case, the owner of the company thought it was all right to manipulate the financial statement numbers primarily because he was the sole owner of the company and controlled the board of directors.

But, the sole owner is for my part answerable for all debts incurred by using the enterprise." Examples of sole owners encompass small corporations which include, a local grocery keep, local garments save, an artist, a freelance author, an IT representative, a freelance photo designer, etc.

A sole owner—additionally called a sole trader or a proprietorship—is an unincorporated business that has simply one proprietor who will pay private earnings tax on profits earned from the commercial enterprise.

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4 0
1 year ago
If the production of oranges reduces global warming, then the equilibrium quantity of oranges will be_________the socially optim
creativ13 [48]

Answer:

B. lower than

Explanation:

As orange has a positive externality which cannot be included in the cost, the social optimal will be lower. That's because, neither the consumer will pay to benefit the entire society a higher price than their marginal utility or the producer produce when marginal cost exceed the marginal revenue

The government should try to subsidize the market to allow for a hiher quantity of organge an achieve the socially optinal quantity.

3 0
3 years ago
The following information summarizes the standard cost for producing one metal tennis racket frame at Spaulding Industries. In a
astra-53 [7]

Answer:

Actual Price paid for materials = $4.2136 \times 2,200 = $9,270

Actual price per unit = $4.2136

Explanation:

Provided information,

Standard Material per unit = $4

Total cost = $8,400

Standard Quantity = $8,400/$4 = 2,100 units

Provided Material Price variance = $470 unfavorable = - $470

= (Standard Price - Actual Price) \times Actual Units

Material Quantity Variance = $400 Unfavorable = - $400

= (Standard Quantity - Actual Quantity) \times Standard Rate

Using Material Quantity Variance

- $400 = (2,100 - Actual Quantity) \times $4

-$400/$4 = 2,100 - Actual Quantity

Actual Quantity = 2,100 + 100 = 2,200 units

Now, putting this value in Material Price Variance we have,

- $470 = ($4 - Actual Price) \times 2,200

-$470/2,200 = $4 - Actual Price

- $0.214 = $4 - Actual Price

Actual Price = $4 + $0.2136 = $4.2136

Final Answer

Actual Price paid for materials = $4.2136 \times 2,200 = $9,270

Actual price per unit = $4.2136

8 0
3 years ago
What is brand repositioning?
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Brand repositioning is when a company changes their status in the marketplace. Like changes to the marketing mix including product, price, location, and promotion. Repositioning happens to fulfill consumer wants and needs

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