Zach Company Owns 45% of the Voting Stock of Tomas

question 120

Multiple Choice

Zach Company owns 45% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $20,000 net loss. Zach Company's entry would include a

• A) Credit to cash for $9,000
• B) Debit to the investment account for $9,000
• C) Credit to the investment account for $9,000
• D) Credit to a loss account for $9,000

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Definitions:

Sales Discount

A reduction in the sale price offered by a seller to a buyer, typically to prompt early payment or reward customer loyalty.

Freight Costs

Freight costs refers to the charges involved in transporting goods by land, sea, or air. This includes the expenses associated with moving merchandise from the point of origin to its destination.

F.O.B. Destination

A shipping term indicating that the seller bears the freight charges and retains ownership of the goods being shipped until they reach the buyer's location.

F.O.B. Shipping Point

Purchaser pays or is responsible for the shipping costs from seller’s shipping point to purchaser’s location.