Purdue Company Had the Following Transactions Pertaining to Stock Investments

question 12

Multiple Choice

Purdue Company had the following transactions pertaining to stock investments: a. February 1: Purchased 3100 shares of Hudson Company (10% ownership) at the market price of $17 per share. Purdue Company intends to keep the stock for more than one year and classifies the stock as available-for-sale.
B. June 1: Received cash dividends of $7000 on Hudson Company stock.
C. October 1: Sold 3100 shares of Hudson stock for $55,800.
The journal entry to record the purchase of the Hudson stock is:

• A)debit Equity-Method Investment for $52,700 and credit Cash for $52,700.
• B)debit Investment in Available-for-Sale Securities for $52,700 and credit Cash for $52,700.
• C)debit Cash for $52,700 and credit Common Stock for $52,700.
• D)debit Common Stock for $52,700 and credit Cash for $52,700.

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Definitions:

Organizational Culture

The collective beliefs, values, standards, and habits that dictate the social and psychological atmosphere within a business or organization.

Right Thing

A moral or ethical course of action that is considered appropriate, just, or in accordance with accepted social or professional standards.

Ethical Choice

The process of deciding among alternatives in a manner that reflects moral principles and values.

Ethical Dilemmas

Situations where individuals must choose between two conflicting moral principles or values.