At the Beginning of 20X1, Manowar Ltd

question 48

Multiple Choice

At the beginning of 20X1, Manowar Ltd. acquired 20% of the voting shares of Cortez Co. for $150,000. Through this investment and by having two seats on their Board of Directors, Manowar has signi?cant in?uence over Cortez. In 20X1, Cortez earned net income of $70,000 and paid dividends of $40,000. In 20X2, Cortez earned net income of $80,000 and paid dividends of $100,000. At the end of 20X2, what is the balance of Manowar's "Investment in Cortez" account?

• A) $152,000
• B) $150,150
• C) $150,000
• D) $172,500

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Definitions:

Drawer

In banking and finance, the person who writes or draws a check, draft, or bill of exchange.

Drawee

The party in a transaction upon whom a check, draft, or bill of exchange is drawn and who is directed to pay.

Unqualified Endorsements

Signatures on a negotiable instrument without any limiting conditions, which transfer full control of the instrument to another party.

Types

Refers to the various categories or distinct forms that objects, concepts, or persons can be classified into.