Hardin Park Company Had These Transactions Pertaining to Stock Investments

question 192

Multiple Choice

Hardin Park Company had these transactions pertaining to stock investments Feb. 1 Purchased 5,000 shares of Raley Company (10%) for $89,000 cash.
June 1 Received cash dividends of $1 per share on Raley stock.
Oct) 1 Sold 2,000 shares of Raley stock for 39,000.
Dec) 1 Received cash dividends of $2 per share on Reley stock.
The entry to record the purchase of the Raley stock would include a

• A) credit to the Stock Investments account for $89,000.
• B) credit to Cash for $90,000
• C) debit to the Stock Investments account for $89,000.
• D) debit to Investment Expense for $1,000.

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Definitions:

Accurate Costing

The process of precisely determining the cost of products or services, taking into account all relevant factors to ensure pricing and profitability assessments are correct.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Work in Process

An account that tracks the costs associated with incomplete goods in manufacturing, including material, labor, and overhead expenses during the production phase.

Absorption Costing

A method of accounting that encompasses all costs associated with manufacturing, including direct materials, direct labor, as well as both variable and fixed overhead expenses, as part of a product's cost.