Blaine Company Had These Transactions Pertaining to Stock Investments

question 70

Multiple Choice

Blaine Company had these transactions pertaining to stock investments:
Feb. 1 Purchased 2,000 shares of Horton Company (10%) for $51,000 cash.
June 1 Received cash dividends of $3 per share on Horton stock.
Oct. 1 Sold 1,200 shares of Horton stock for $32,400.
The entry to record the receipt of the dividends on June 1 would include a

• A) debit to Stock Investments for $6000.
• B) credit to Dividend Revenue for $6000.
• C) debit to Dividend Revenue for $6000.
• D) credit to Stock Investments for $6000.

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Definitions:

Amortization Period

The length of time over which the principal of a debt is scheduled to be paid down through amortization.

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for time value of money.

Payback Period

The duration required to recover the initial investment in a project or asset, based on the cash inflows that the investment generates.

Time Value

The principle that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.