Multiple choice questions based on share valuation.
1. Use the following information to answer this question:
Nagen Company had these transactions pertaining to stock investments:
Feb. 1 Purchased 2,000 shares of Cagney Company (10%) for $33,200 cash plus brokerage fees of $800. June 1 Received cash dividends of $2 per share on Cagney stock. Oct. 1 Sold 800 shares of Cagney stock for $16,000 less brokerage fees of $400. The entry to record the sale of the stock would include a
a. debit to Cash for $16,000.
b. credit to Gain on Sale of Stock Investments for $800.
c. debit to Stock Investments for $13,600.
d. credit to Gain on Sale of Stock Investments for $2,000.
2. On January 1, Barone Company purchased as a short-term investment a $1,000, 8% bond for $1,050. The bond pays interest on January 1 and July 1. The bond is sold on October 1 for $1,200 plus accrued interest. Interest has not been accrued since the last interest payment date. What is the entry to record the cash proceeds at the time the bond is sold?
a. 1
b. 2
c. 3
d. 4