Bart Company Acquired 10 Percent of the Voting Stock of Ernie

question 27

Multiple Choice

Bart Company acquired 10 percent of the voting stock of Ernie Company for $10 million.Bart Company plans to keep the investment for several years.At the end of Year 1,Ernie Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Bart Company's investment in Ernie Company is $11 million.What entry is necessary at the end of Year 1 to account for the change in market value of Bart Company's investment in Ernie Company?

• A) No entry is needed.
• B) Cash increases $11 million and Stockholders' equity increases $11 million.
• C) Investments increase $11 million and Stockholders' equity increases $11 million.
• D) Investments increase $1 million and Stockholders' equity increases $1 million.

Calculate the cost of goods manufactured and sold, including after the allocation of underapplied or overapplied manufacturing overhead.

Understand the calculation and interpretation of the cost of goods manufactured.

Understand the process for adjusting the cost of goods sold on the income statement.

Comprehend the allocation of underapplied or overapplied manufacturing overhead to inventory accounts and the cost of goods sold.

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Definitions:

Different Kinds

Various types or categories within a particular subject or area, highlighting diversity or a range of options.

Municipal Bond

A debt security issued by a state, municipality, or county to finance its capital expenditures.

Industrial-Development Bond

Tax-exempt bonds issued by municipal or county governments to finance the development of industrial or commercial facilities, intended to create jobs and promote economic growth.

Revenue Bond

A type of municipal bond supported by the revenue from a specific project, such as a toll road or a public utility, rather than general taxes.