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Alex787 [66]
3 years ago
9

January 1, 2021, Smith Co. purchased common stock of North Company for $500,000. North Company has common stock outstanding of $

10 million. Smith owns 5% of the outstanding stock of North. On December 31, 2021, the investment in North Company has a fair value of $505,000. On January 1, 2022, Smith sells the investment in North Company for $505,000. What journal entry is required to record the sale
Business
1 answer:
wel3 years ago
6 0

Answer:

Fair Value adjustment $5,000 Dr.

Unrealized holding gain-net income $5,000 Cr.

Explanation:

Common stock purchase price = $500,000

North company outstanding stock = $10,000,000

5% stock of outstanding stock purchased :

(5/100) * $10,000,000

0.05 * 10,000,000

= $500,000

Fair value of investment = $505,000

Adjustment in fair value = $505,000 - $500,000 = $5000 ( Debit)

Unrealized holding gain-net income = $505,000 - $500,000 ( Credit)

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Claudia, a legal assistant, has been vested by her employer after having worked with the employer for ten years. This implies th
galben [10]

Answer: b. she will receive the amounts contributed by both the employer and herself when she retires

Explanation:

Since Claudia, has been vested by her employer after having worked with the employer for ten years, she will receive the amounts contributed by both the employer and herself when she retires

In this case, Claudia is vested and has the right to claim her funds in the retirement plan since she has worked for ten years.

4 0
3 years ago
A coase solution to a problem of externality insures ensures that a socially efficient outcome is to:
Zinaida [17]

Answer:

The correct answer is letter "C": maximize the joint welfare, irrespective of the right of ownership.

Explanation:

Named after British economist Ronald Coase (1910-2013) the Coase Theorem is a legal and economic theory which states that, when there are competitive markets and no transaction costs, <em>bargaining will result in an effective and mutually beneficial outcome irrespective of how property rights are distributed</em>.

5 0
3 years ago
Derek can deposit $279.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month.
algol13

Answer:

The rate that Bank B must pay Derek to have have the same amount in both accounts after 10 years is:

= 22.611%

Explanation:

a) Data and Calculations:

Monthly deposit in Bank A= $279

Period of deposit = 120 (10 * 12) months

Interest rate = 14% compounded monthly

Using an online finance calculator, the future value =

Sum of all periodic payments = $33,480.00

Total Interest =                           $38,800.23

Future value of funds =             $72,280.23

Annual deposit in Bank B = $2,447

Period of deposit = 10 years

Future value = $72, 280.23

Therefore, the Interest rate = 22.611%

8 0
3 years ago
4) Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz famil
BigorU [14]

Answer:

D) hamburgers and hot dogs are substitutes.

Explanation:

Option A is incorrect. When the price of one good increases, the demand for other good decreases. It is called complementary goods. In this question, due to the increase in the price of hamburgers, the Ruiz family started taking hot dogs. Therefore, hot dogs price is not increasing. Therefore, it is a substitute good. Substitute goods state that the increase in the price of one good leads to the increase in demand for another good. Therefore, option D is correct.

Normal goods and inferior goods are related to income, so those are not answers.

3 0
3 years ago
Suppose that electricity producers create a negative externality equal to $5 per unit. Further suppose that the government impos
VashaNatasha [74]

Answer:

They are equal

Explanation:

Negative externality is when the benefits of economic activities to third parties is less than its costs.

A tax is levied on negative externality to reduce quantity produced to the social optimal quantity.

If the amount of tax is equal to the amount of total negative externality, then after-tax equilibrium quantity will be equal to social optimal quantity.

If the amount of tax is less than the amount is equal to the amount of total negative externality, then after-tax equilibrium quantity will be greater than the social optimal quantity.

If the amount of tax is greater than the amount is equal to the amount of total negative externality, then after-tax equilibrium quantity will be less than the social optimal quantity.

I hope my answer helps you

8 0
3 years ago
Read 2 more answers
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