31) How does the receipt of a cash dividend on a long-term Investment in Available-for-Sale Securities affect the balance sheet?
A) Increases assets and increases paid-in-capital
B) Increases assets and decreases stockholders' equity
C) Increases assets and increases retained earnings
D) Has no effect on assets or total stockholders' equity
32) How does the receipt of a stock dividend on long-term Investment in Available-for-Sale Securities affect the balance sheet?
A) Increases assets and increases paid-in-capital
B) Increases assets and decreases stockholders' equity
C) Increases assets and increases retained earnings
D) Has no effect on assets or total stockholders' equity
33) An investor receives a stock dividend on a long-term Investment in Available-for-Sale Securities. What journal entry is required?
A) debit Cash and credit Investment in Available-for-Sale Securities
B) debit Cash and credit Dividend Revenue
C) debit Investment in Available-for-Sale Securities and credit Investment Revenue
D) No journal entry is required.
34) The gain or loss on the sale of an investment classified as a long-term available-for-sale-security is calculated by comparing the ________ of the investment with the ________ of the investment.
A) carrying value; selling price
B) fair value at last balance sheet date; selling price
C) cost; selling price
D) fair value at date of sale; selling price
35) Seider Company receives a stock dividend of 100 shares from Dolhun Company. Seider previously owned 750 shares of Dolhun stock that had a cost of $4,800. After the stock dividend, the cost per share of Dolhun stock is now:
A) $5.40.
B) $5.65.
C) $5.76.
D) $6.40.
36) A long-term investment in available-for-sale securities was acquired at a cost of $40,000. At year-end, the fair value of the securities is $42,250. The year-end adjusting entry requires a:
A) credit Investment in Available-for-Sale Securities for $2,250.
B) debit Allowance to Adjust Investment in Available-for-Sale Securities to Market for $2,250.
C) credit Allowance to Adjust Investment in Available-for-Sale Securities to Market for $2,250.
D) debit Unrealized Loss on Investment in Available-for-Sale Securities for $2,250.
37) The journal entry to record the sale of a long-term available-for-sale investment includes a Gain on Sale of Investment in Available-for-Sale Securities for $500. The income statement will report:
A) other comprehensive income of $500.
B) other income and gains of $500.
C) an extraordinary gain of $500.
D) accumulated other comprehensive income of $500.
38) Other comprehensive income:
A) is a separate section of stockholders' equity on the balance sheet.
B) is reported in the liability section of the balance sheet.
C) is reported on the statement of comprehensive income.
D) is reported in the long-term investments section of the balance sheet.
39) The Allowance to Adjust Investment in Available-for-Sale Securities to Market account has a current credit balance of $1,000 after the adjustment at year-end. Available-for-sale investments have a fair value of $20,000. The original cost of the investments was $21,000. The carrying value of the investments is:
A) $18,000.
B) $19,000.
C) $20,000.
D) $21,000.
40) The Allowance to Adjust Investment in Available-for-Sale Securities to Market account has a current credit balance of $892. Long-term available-for-sale investments with a cost of $17,000 have a current fair value of $18,500. The adjusting entry will require a:
A) credit to Allowance to Adjust Investment in Available-for-Sale Securities to Market for $608.
B) credit to Allowance to Adjust Investment in Available-for-Sale Securities to Market for $2,392.
C) debit to Allowance to Adjust Investment in Available-for-Sale Securities to Market for $608.
D) debit to Allowance to Adjust Investment in Available-for-Sale Securities to Market for $2,392.