Question

Amazon Services, Inc. invests its excess cash in Nile Technologies, Inc. and acquires 3,000 shares for $57.00 per share. Amazon Services, Inc. owns less than 1% of Nile's voting stock and plans to hold the stock for two years. While preparing the journal entry to record this transaction, O A. Equity Investments is debited for $171,000 O B. Long-term Investments is credited for $171,000 O c. An equity account is debited for $171,000 OD. Common Stock is debited for $171,000 Gaines Corporation invested $120,000 to acquire 22,000 shares of Owens Technologies, Inc. on March 1, 2018. On July 2, 2019, Owens pays a cash dividend of $3.25 per share. The investment is classified as equity securities with no significant influence. Which of the following is the correct journal entry to record the transaction on July 2, 2019? O A. Cash Equity Investments 71,500 71,500 71,500 O B. Cash Retained Earnings 71,500 71,500 71,500 O C. Equity Investments Cash OD. Cash Dividend Revenue 71,500 71,500

Answer 1

Solution 1:

While preparing journal entry to record this transaction "Equity investment in debited for $171,000"

Hence option A is correct.

Solution 2:

Correct journal entry to record the transaction on 02.07.2019 is:

Cash Dr $71,500

Dividend Revenue $71,500

Hence option D is correct.

Solution 3:

Correct journal entry for the transaction is:

Equity investments - Blue investment Inc. Dr $2,250,000

Cash Cr $2,250,000

Hence option C is correct.

Solution 4:

The correct journal entry is:

Unrealized holding loss - Trading Dr $5,200

Fair value adjustment - Trading Cr $5,200

Hence option A is correct.