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1. On November 10, Kendra, Inc., a U.S. Company, sold merchandise on credit to Nakakura Company of Japan at the price of 1,500,000 yen. Exchange rate was $0.00837 per yen on date of sale. On December 31, when Kendra made its financial statements, exchange rate was $0.00843. Nakakura Company paid hi full on January 12, when exchange rate was $0.00861. Kendra must create the following journal entry:

 

a Sales 90
  Foreign Exchange Gain 90
b Foreign Exchange Loss 90
  Sales 90
c Accounts Receivable 90
  Foreign Exchange Gain 90
d Foreign Exchange Loss 90
  Accounts Receivable 90
e No journal entry is required until the amount is collected.

 

2. For investments in TRADING SECURITIES, which of the giveb market value changes are recognized in earnings?

a. Realized gains only.
b. Unrealized gains only.
c. Realized losses only.
d. Unrealized losses only.
e. Unrealized and realized gains and losses.

 

3. Unrealized holding gains and losses are recorded directly in the owners' equity account for investments in:

a. Trading securities.
b. Securities available for sale.
c. Common stock for which the holder has significant influence.
d. Bonds to be held to maturity.

 

4. York, Inc., owns 40 percent of outstanding stock of Bay Company. In 20X5, York received a $4,000 cash dividend from Bay. What effect did this have on York's 20X5 financial statements?

a. Increased total assets.
b. Decreased investment account.
c. Increased income.
d. Decreased total assets.
e. Decreased income.

 

5. Company had net income of $43,000, net sales of $380,500, and total assets of $220,000. Its profit margin and total asset turnover were, respectively:

a. 11.3%; 1.73.
b. 11.3%; 19.5.
c. 1.7%; 19.5.
d. 11.3%; 19.5.
e. 19.5%; 11.3.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M921826

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