Use the Following Information for Questions 19-21

question 23

Multiple Choice

Use the following information for Questions 19-21.
On January 1, 2009, Pharma Company purchased 16,000 of the 20,000 outstanding common shares of Sludge Company for $760,000.On January 1, 2013, Pharma Company sold 2,000 of its shares of Sludge Company on the open market for $90 per share.Sludge Company's stockholders' equity on January 1, 2009, and January 1, 2013, was as follows:
1/1/09 1/1/13 The difference between implied and book value is assigned to Sludge Company's land.
-As a result of the sale, Pharma Company's Investment in Sludge account should be credited for

• A)$110,000.
• B)$137,500.
• C)$80,000.
• D)$95,000.
• E)None of these.

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Definitions:

Accounts Payable Period

The average number of days it takes for a business to pay its invoices from suppliers, reflecting its payment policy efficiency.

Cash Cycle

The time it takes for a company to convert its investments in inventory back into cash.

Cash Cycle

The period between the outlay of cash for raw materials and receiving payment from customers for goods or services, reflecting the efficiency of a company's cash management.

Paying Suppliers

The process of settling financial transactions with suppliers by transferring payment for goods or services received.