61.The journal entry Pierce will record on February 1 will include a a.credit to Interest Revenue for $1,500 b.credit to Gain on Sale of Investments for $1,500 c.credit to Cash for $52,500 ...

61.The journal entry Pierce will record on February 1 will include a

a.credit to Interest Revenue for $1,500

b.credit to Gain on Sale of Investments for $1,500

c.credit to Cash for $52,500

d.credit to Interest Receivable for $600

62.What are the total proceeds from the February 1 sale?

a. $52,400

b. $51,500

c. $50,000

d. $52,000

63.Alan Company purchased $400,000 of ABC Co. 5% bonds at 100 plus accrued interest of $4,500. Alan later sold$250,000 of bonds at 97. The journal entry for the purchase would include a

a.credit to Interest Receivable for $4,500

b.credit to Interest Revenue for $4,500

c.debit to Interest Receivable for $4,500

d.debit to Interest Revenue for $4,500

64.Interest revenue on bonds is reported

a.as an addition to the Investment in Bonds account

b.as part of comprehensive income but not as part of net income

c.as part of other income

d.as part of operating income

65.Which of the following stock investments should be accounted for using the cost method?

a.investments of less than 20%

b.investments between 20% and 50%

c.investments of less than 20% and investments between 20% and 50%

d.all stock investments should be accounted for using the cost method

66.Jarvis Corporation makes an investment in 100 shares of Saxton Company's common stock. The stock is purchasedfor $45 a share plus brokerage fees of $280. The entry for the purchase is

a.Cash4,500

Investments—Saxton Company Stock4,500

b.Investments—Saxton Company Stock4,780

Cash4,780

d. Investments—Saxton Company Stock4,500

Cash4,500

67.Which of the following statements is
nota reason a company may purchase another company's stock?

a.earning a return on excess cash

b.sustain the other company's stock price

c.gaining control of another company's operations

d.developing or maintaining business relationships

68.The cost method of accounting for stock

a.recognizes dividends as income

b.is only appropriate as part of a consolidation

c.requires the investment be increased by the reported net income of the investee

d.requires the investment be decreased by the reported net income of the investee

69.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for$49.50 per share. What is the amount of gain or loss on the sale?

a. $12,750 gain

b.$600 gain

c.$600 loss

d.$9,250 loss

70.The equity method of accounting for investments

a.requires a year-end adjustment to revalue the stock to lower of cost or market

b.requires the investment to be reported at its original cost

c.requires the investment be increased by the reported net income of the investee

d.requires the investment be increased by the dividends paid by the investee