Purdue Company Had the Following Transactions Pertaining to Stock Investments

question 156

Multiple Choice

Purdue Company had the following transactions pertaining to stock investments: a.February 1,Purchased 3,000 shares of Hudson Company (10% ownership) at the market price of $17 per share.Purdue Company intends to keep the stock for more than one year and classifies the stock as available-for-sale.
B.June 1,Received cash dividends of $6,000 on Hudson Company stock.
C.October 1,Sold 3,000 shares of Hudson stock for $54,000.
The journal entry to record the purchase of the Hudson stock is:

• A)debit Equity-Method Investment for $51,000 and credit Cash for $51,000.
• B)debit Investment in Available-for-Sale Securities for $51,000 and credit Cash for $51,000.
• C)debit Cash for $51,000 and credit Common Stock for $51,000.
• D)debit Common Stock for $51,000 and credit Cash for $51,000.

Comprehend the fundamental assumptions guiding financial reporting.

Recognize the importance and purpose of financial statements in communicating business activities.

Understand ethical responsibilities in accounting and financial reporting.

Understand the relevance of accounting in various contexts, not limited to profit-oriented businesses.

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Definitions:

Interconnected Stages

Phases or steps that are linked or related in such a way that changes in one stage affect the others.

Creative Process

A sequence of thoughts and actions that lead to the production of novel and useful ideas or outcomes.

Elimination

The process of removing or getting rid of something or someone.

Win-Lose Situation

A conflict resolution scenario where one party's gain is directly correlated with another party's loss, often leading to competitive or adversarial interactions.