Worldminus−wide Financial Services, Inc. invested $30,000 to acquire 6,250 shares of Dawn Investments, Inc. on March...
Worldminus−wide Financial Services, Inc. invested $30,000 to acquire 6,250 shares of Dawn Investments, Inc. on March 15, 2016. This investment represents less than 20% of the investee's voting stock. On May 7, 2019, World−wide Financial Services, Inc. sells 3,000 shares for $14,250. In the accounting equation on May 7, 2019, ________.
A. total assets will increase
B. total assets will remain unchanged
C. total equity will decrease
D. total liabilities will decrease
Homework Answers
6,250 shares of Dawn Investments, Inc. were purchased for $30,000.
Cost of 3,000 shares sold = 30,000 x 3,000/6,250
= $14,400
On May 7, 2019, World−wide Financial Services, Inc. sells 3,000 shares for $14,250.
Loss on shares sold = Cost of 3,000 shares sold - Sale price of 3,000 shares
= 14,400 - 14,250
= $150
Loss would decrease total equity by $150
In the accounting equation on May 7, 2019, total equity will decrease.
Correct option is (C)
Kindly comment if you need further assistance. Thanks
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Worldminus−wide Financial Services, Inc. invested $30,000 to
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