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ACCOUNTING

ACCOUNTING - 1)pk acquired a 25 interest in Trent Co on...

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1)pk acquired a 25% interest in Trent Co. on January 1, 2010, for \$500,000. At that time, Trent had 1,000,000 shares of its \$1 par common stock issued and outstanding. During 2010, Trent paid cash dividends of \$160,000 and thereafter declared and issued a 5% common stock dividend when the market value was \$2 per share. Trent's net income for 2010 was \$360,000. What is the balance in Agee’s investment account at the end of 2010 Cost \$500,000 Share of net income (.25 × \$360,000) 90,000 Share of dividends (.25 × \$160,000) (40,000 ) Balance in investment account \$550,000 2)During 2008, PK Co. purchased 2,000, \$1,000, 9% bonds. The carrying value of the bonds at December 31, 2010 was \$1,960,000. The bonds mature on March 1, 2015, and pay interest on March 1 and September 1. PK sells 1,000 bonds on September 1, 2012, for \$988,000, after the interest has been received. PK uses straight-line amortization. The gain on the sale is Discount amortization: \$40,000 × 8/50 = \$6,400 (\$1,960,000 + \$6,400) ÷ 2 = \$983,200; \$988,000 – \$983,200 = \$4,800 gain. 1. On August 1, 2011, Lane Corporation called its 10% convertible bonds for conversion.

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ACCOUNTING - 1)pk acquired a 25 interest in Trent Co on...

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