On June 1, 2018, Mango Corp

question 3

Multiple Choice

On June 1, 2018, Mango Corp. purchased Papaya Corp. common shares for $12,100 as a trading investment. Three months later, Mango sold these shares for $13,000. The entry to record the sale would include a

• A) debit to Cash of $12,100.
• B) credit to Interest Revenue of $900.
• C) credit to Held for Trading Investments of $13,000.
• D) credit to Realized Gain on Held for Trading Investments of $900.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from total revenue.

Depreciation Expense

The allocated amount of the cost of an asset, spread out over the time it is expected to be used, reflecting its consumption, wear and tear, or obsolescence.

Indirect Method

In cash flow calculation, this method adjusts net income for non-cash transactions and changes in working capital to arrive at net cash provided by operating activities.

Net Loss

The negative financial result that occurs when a company's expenses exceed its revenues.