Glitter Services Pays $700,000 for 100,000 Shares to Acquire 30

question 58

Multiple Choice

Glitter Services pays $700,000 for 100,000 shares to acquire 30% of voting stock of Grey Investments on January 5, 2016. Grey Investments declares and pays a cash dividend of $1.4 per share on June 14, 2016. Which of the following is the correct journal entry for the transaction on June 14, 2016?

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Definitions:

Call

A contract that grants the holder the ability, though not the requirement, to purchase a certain quantity of an underlying asset at a predetermined price before a specified deadline.

Exercise Price

The set price at which an option's holder has the right to purchase (call) or sell (put) the underlying asset.

Stock Price

indicates the current price at which a share of a company can be bought or sold on a stock exchange.

Issue Value

The price at which a new issue of securities is offered for sale to the public or the nominal value of a security at the time of its issuance.