Pansee Company Had the Following Transactions Pertaining to Stock Investments

question 33

Multiple Choice

Pansee Company had the following transactions pertaining to stock investments: a. February 1: Purchased 2900 shares of Hudson Company (10% ownership) at the market price of $22 per share. Pansee 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 $4000 on Hudson Company stock.
C. June 30: End of accounting period. Fair value of Hudson Company stock is $62,800. The company uses an allowance account to adjust the investment.
Which journal entry is prepared on June 30?

• A)debit Unrealized Loss on Investment in Available-for-Sale Securities for $1000 and credit Allowance to Adjust Investment in Available-for-Sale Securities to Market for $1000
• B)debit Allowance to Adjust Investment in Available-for-Sale Securities to Market for $1000 and credit Unrealized Loss on Investment in Available-for-Sale Securities for $1000
• C)debit Unrealized Loss on Investment in Available-for-Sale Securities for $1000 and credit Investment in Available-for-Sale Securities for $1000
• D)debit Investment in Available-for-Sale Securities for $1000 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $1000

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Definitions:

Undue Influence

An unlawful practice where an individual or entity exerts excessive pressure or uses manipulative tactics to coerce another party into making a legal decision that they would not have made otherwise.

Non Est Factum

A legal defense claiming a contract is void because the signer was fundamentally mistaken or misled about its nature.

Restrictions

Limitations or conditions imposed on activities, rights, or behaviors to regulate them.

Innocent Misrepresentation

A false statement made by one party to another, where the person making the statement genuinely believes it to be true.