Glitter Services Owns 30% of Voting Stock of Grey Investments

question 76

Multiple Choice

Glitter Services owns 30% of voting stock of Grey Investments. During the year 2015, Grey Investments earned profits of $250,000. Under the equity method, which of the following journal entries will Glitter Services record?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Long-term Investments-Grey Investments } & 250,000 & \\
• \hline \text { Cash } & & 250,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Cash } & 75,000 & \\
• \hline \text { Dividend Revenue } & & 75,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cash } & 75,000 & \\
• \hline \text { Long-term Investments-Grey Investments } & & 75,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Long-term Investments-Grey Investments } & 75,000 & \\
• \hline \text { Revenue from Investments } & & 75,000 \\
• \hline
• \end{array}\]

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