Pryor Company receives net proceeds of $42,000 on the sale of stock investments that cost $39,500.

This transaction will result in reporting in the income statement a: gain of $2,500 under "Other revenues and gains." Assume that Horicon Corp acquired 25% of the common stock of Sheboygan Corp. on January 1, 2011, for $300,000. During 2011 Sheboygan Corp. reported net income of $160,000 and paid total dividends of $60,000. If Horicon uses the equity method to account for its investment, the balance in the investment account on December 31, 2011, will be: $325,000. Using the information in question 6, what entry would Horicon make to record the receipt of the dividend from Sheboygan? Debit Cash and credit Stock Investment Net income is $132,000, accounts payable increased $10,000 during the year, inventory decreased $6,000 during the year, and accounts receivable increased $12,000 during the year. Under the indirect method, how much is net cash provided by operations? Net cash provided by operating activities is computed by adjusting net income for the changes in the three current asset/current liability accounts listed. An increase in accounts payable and a decrease in inventory are added to net income and an increase in accounts receivable is subtracted from net income. The result is: $132,000 + $10,000 + $6,000 - $12,000 = $136,000.

1. Journalize the 2009 transactions and post to the account Stock Investments July 1 Received $1 per share semiannual cash dividend on Pine Co. common stock. Dr Cash $5,000 Cr Dividend revenue/income $5,000 Aug. 1 Received $0.50 per share cash dividend on Hurst Co. common stock. Dr Cash $1,000 Cr Dividend revenue $1,000 Sept. 1 Sold 1,500 shares of Pine Co. common stock for cash at $8 per share, less brokerage fees of $300 Dr Cash $11,700 Dr Loss on sale of investments $1,800 Cr Stock Investments $13,500 (1,500 x cost of $9) Oct. 1 Sold 800 shares of Hurst Co. common stock for cash at $33 per share, less brokerage fees of $500 Dr Cash $25,900 Cr Stock investments $$24,000 ($800 x cost of $30) Cr Gain on sale of investments $1,900 Nov. 1 Received $1 per share cash dividend on Scott Co. common stock. Dr Cash $1,500

Cr Dividend revenue $1,500 Dec. 15 Received $0.50 per share cash dividend on Hurst Co. common stock Dr CAsh $600 Cr Dividend revenue $600 (1,200 shares x $0.50) Dec. 31 Received $1 per share semiannual cash dividend on Pine Co. common stock Dr Cash $3,500 Cr Dividend $3,500 2. Prepare the adjusting entry at December 31, 2009, to show the securities at fair value. The stock should be classified as available-for-sale securities .......... .......... ........... .......Fair value .......... Cost Hurst Co. $32 x 1,200 = $38,400; ..........$36,000 Pine Co. $8 x 3,500 = $28,000; .............$31,500 Scott Co. $18 x 1,500 = $27,000; ..........$30,000 Totals .......... .......... ........$93,400 .......... .$97,500 <== loss of $4,100 Dr Fair value loss in OCI $4,100 (taken to AFS reserve in equity) Cr AFS Stock investments $4,100 3. Show the balance sheet presentation of the investments at December 31, 2009. At this date, Ramey Associates has common stock $1,500,000 and retained earnings $1,000,000 Non-current assets AFS securities $93,400 Stockholders' equity Common stock $1,500,000 AFS reserve ($4,100) Retained earnings $1,000,000 Total $2,495,900

Here are comparative balance sheets for Taguchi Company. TAGUCHI COMPANY Comparative Balance Sheets December 31 Assets 2011 2010

Cash $73,000 $22,000 Accounts receivable 85,000 76,000 Inventories 170,000 189,000 Land 75,000 100,000 Equipment 260,000 200,000 Accumulated depreciation (66,000) (32,000) Total $597,000 $555,000 Liabilities and Stockholders' Equity Accounts payable $39,000 $47,000 Bonds payable 150,000 200,000 Common stock ($1 par) 216,000 174,000 Retained earnings 192,000 134,000 Total $597,000 $555,000 Additional information: 1. Net income for 2011 was $103,000. 2. Cash dividends of $45,000 were declared and paid. 3. Bonds payable amounting to $50,000 were redeemed for cash $50,000. 4. Common stock was issued for $42,000 cash. 5. No equipment was sold during 2011, but land was sold at cost. Are you looking for cash flow. Indirect method Operating Activities 103,000 Net Income + 34,000 Depreciation (66,000 - 32,000) - 9,000 increase in A/R + 19,000 decrease in inventory - 8,000 decrease in A/P = $139,000 cash flow from operating activities Investing Activities + 25,000 sale of land - 60,000 equipment purchase = - $35,000 cash flow from investing activities Financing Activities - 45,000 dividends - 50,000 redemption of bonds + 42,000 stock issue = - $53,000 cash flow from financing activities

139,000 - 35,000 - 53,000 = $51,000 total cash flow 22,000 beginning cash balance + 51,000 = 73,000 ending cash balance