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Exam 15: Investments and International Operations

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Question 21

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Explain the difference between short-term and long-term investments.Cite examples of each.

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Short-term investments are securities ex...

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Question 22

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Morgan Company purchased 2,000 shares of Asta's common stock for $143,000 as a long-term investment.The investment is classified as available-for-sale securities.The par value of the stock was $1 per share.Morgan paid $375 in commissions on the transaction.The entry to record the transaction would include a:

A) Credit to Common Stock for $2,000.
B) Credit to Common Stock for $143,000.
C) Credit to Common Stock for $143,375.
D) Debit to Long-Term Investments-AFS for $143,000.
E) Debit to Long-Term Investments-AFS for $143,375.

F) A) and D)
G) A) and C)

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Question 23

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Micron owns 30% of JVT stock.Micron received $6,500 in cash dividends from its investment in JVT.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term Investments for $6,500.

Seamark buys $300,000 of Eider's 8% five-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry to accrue interest earned at year-end December 31 is:

If the exchange rate for Canadian and U.S.dollars is 0.7382 to 1,this implies that 2 Canadian dollars will buy 1.48 worth of U.S.dollars.

Kramer Corporation had the following long-term investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events.

A company had net income of $45,000,net sales of $390,000,and average total assets of $250,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

An investor purchased at par value $75,000 of Cort's 8% bonds,that mature in three-years.The bonds pay interest semiannually on June 1 and December 1.The investor plans to hold the bonds until they mature.When the bonds mature,the investor should prepare the following journal entry:

If a U.S.company makes a credit sale to a foreign company,the sales price must be translated into dollars as of the date of _____________.

A company owns 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1.The amount of interest accrued on December 31 (the company's year-end) would be:

The price of one currency stated in terms of another currency is called a(n) :

Accounting for long-term investments in equity securities with controlling influence uses the:

Long-term investments:

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ____ worth of U.S.dollars.

Debt securities are recorded at cost when purchased.

Doherty Corporation had net income of $30,000,net sales of $1,000,000,and average total assets of $500,000.Its return on total assets is:

Short-term investments in held-to-maturity debt securities are accounted for using the:

A company paid $500,000 for 12% bonds with a par value of $500,000.The bonds pay 6% interest semiannually on September 1 and March 1.The company intends to hold the bonds until they mature.Prepare the journal entries for the following dates and transactions related to this bond acquisition. (1)Bonds purchased on September 1. (2)Year-end adjusting entry,December 31. (3)Receipt of semiannual interest March 1. (4)Redemption of the bonds at maturity on August 31.

Long-term investments are reported in the: