1.The receipt of cash dividends on a long-term investment in common stock is accounted for as a debit to Cash and a

Question

1.The receipt of cash dividends on a long-term investment in common stock is accounted for as a debit to Cash and a credit to Long-Term Investments. Which of the following methods is being used to account for the investment? O equity method market method cost method O revenue method 2.a Financial Transaction Worksheet Stephanie Calamba is the owner of the Calamba Repairs Specialist. On Jan. 1, 2021, the assets, liabilities and proprietor's capital of the business were: Cash, P25,000; Accounts Receivable, P4,000; Supplies, P5,000; Equipment, P60,000; Accounts Payable, P9,000; Calamba, Capital, P85,000. The transactions for the month of January were as follows: Accounts Receivable Accounts: Payable Calamba, Capital Cash + + Supplies Equipment + Jan. 1 Balance + P25,000 P85,000 P4,000 P9,000 + P60,000 P5,000 + + b. Doll foo 2. TO 12.000 10,000 40.000 (2,000) 17.000) 17.000 1000 11 050) le so 1500 405 b. C. d. e. f. 500 4130 36,000 14.500 15,00 Paid P3,000 of the outstanding accounts

Help In Homework · Accepted Answer

1.The correct answer is (a) equity method. As per equity method, the investor company which receives cash dividends from the investee company (for instance X co.) records an increase in its balance of cash with a corresponding decrease in the carrying value of its investment in X company. The following entry is passed by the investor company- Cash Investment in X company 2. Cash + Accounts Receivable + Supplies + Equipment = Accounts Payable + Calamba Capital Jan 1 Balance 25000 + 4000 + 5000 + 60000 = 9000 + 85000 a (3000) + 0 + 0 + 0 = (3000) + 0 b 1000 + (1000) + 0 + 0 = 0 + 0 c 0 + 0 + 2500 + 0 = 2500 + 0 d 12000 + 0 + 0 + (12000) = 0 + 0 e 10000 + 0 + 0 + 0 = 10000 + 0 f (2000) + 0 + 0 + 0 = (2000) + 0 g (2000) + 0 + 0 + 10000 = 8000 + 0 h (1650) + 0 + 1650 + 0 = 0 + 0 i 2500 + (2500) + 0 + 0 = 0 + 0 Jan 31 Balance 41850 + 500 + 9150 + 58000 = 24500 + 85000 Closing Balance of Assets = 41850+500+9150+58000 = 109500 Closing Balance of Liabilities & Shareholders Equity = 24500+85000 = 109500 The closing balance has been tallied. The working given by you were correct. Feel free to comment if you have any doubts or corrections.

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Archived Solution

	Cash	+	Accounts Receivable	+	Supplies	+	Equipment	=	Accounts Payable	+	Calamba Capital
Jan 1 Balance	25000	+	4000	+	5000	+	60000	=	9000	+	85000
a	(3000)	+	0	+	0	+	0	=	(3000)	+	0
b	1000	+	(1000)	+	0	+	0	=	0	+	0
c	0	+	0	+	2500	+	0	=	2500	+	0
d	12000	+	0	+	0	+	(12000)	=	0	+	0
e	10000	+	0	+	0	+	0	=	10000	+	0
f	(2000)	+	0	+	0	+	0	=	(2000)	+	0
g	(2000)	+	0	+	0	+	10000	=	8000	+	0
h	(1650)	+	0	+	1650	+	0	=	0	+	0
i	2500	+	(2500)	+	0	+	0	=	0	+	0
Jan 31 Balance	41850	+	500	+	9150	+	58000	=	24500	+	85000