Presented Below Are the Balance Sheets of Monty Company and Hall

question 81

Multiple Choice

Presented below are the balance sheets of Monty Company and Hall Company at January 1, 20X6: $\begin{array}{ll}\text { Hall Company Balance } && \text { MontyC omp any } \\\text { Sheet } && \text { Balance Sheet } \\\text { January 1, 20X6 } && \text { January 1, 20X6 }\\\text { Cash } & \$ 100 & \text { Cash } & \$ 400 \\\text { Net fixed assets } & \underline{400} & \text { Net fixed assets } & \underline{380} \\\text { Total assets } & \$ 500 & \text { Total assets } & \$ 780\\\text { Accounts payable Long- }& \$ 20& \text { Accounts payable Long- } &\$ 120\\\text { term bonds }&&\text { term bonds }&\\\text { payable }&220&\text { payable }&280\\\text { Stockholders' equity Total } &260 & \text { Stockholders' equity } &380\\\text { liabilities and }&&\text { Total liabilities and }\\\text { stockholders' equity } & \$ 500 & \text { stockholders' equity }&\$ 780\\\end{array}$ On January 1, 20X6, Monty Company acquired 100% of the outstanding common stock of Hall Company for $260 in cash. If Hall Company generated net income during 20X2 of $30, and none of the income resulted from intercompany sales, would be the amount of the elimination entry at the end of 20X6.

• A) $230
• B) $290
• C) $30
• D) $- 0-

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Definitions:

Loanable Funds

Funds available for borrowing, influenced by savings and investments, which affect interest rates and economic activity.

Credit Rating

An assessment of the creditworthiness of a borrower in terms of their ability to repay a loan or debt.

Pure Rate

This term might refer to the basic interest rate or insurance premium rate without including any modifications, but clarification is needed as "pure rate" can have context-dependent meanings.