Davis Company Purchased 30% of the Outstanding Shares of Ocean

question 36

Multiple Choice

Davis Company purchased 30% of the outstanding shares of Ocean Corporation on January 1 at a cost of $580,000. Ocean Corporation reported net income of $95,000 and paid total dividends of $25,000 for the year. At the end of the year, Ocean shares had a current market value of $590,000. After all necessary adjusting entries are made for the year, the balance in Davis Company's Long-Term Investment account will be:

• A) $601,000.
• B) $580,000.
• C) $675,000.
• D) $650,000.

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Definitions:

Drainage

The removal of fluid, such as pus or blood, from a wound or body cavity, often using a tube or other device, to promote healing.

Auditory Canal

A tube-like structure that extends from the outer ear to the eardrum, conducting sound waves to the eardrum.

Basal Skull Fracture

A fracture at the base of the skull, often associated with serious head injuries and potential complications.

Ruptured Drum

A tear or hole in the eardrum, leading to hearing loss and possible ear infection.