Reference no: EM132406670
Question
1. On January 2, 2018, All Good Company purchased 7,000 shares of the stock of Big Bad Company, and DID obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $14 per share, and represents a 30% ownership stake. Big Bad Company made $200,000 of net income in 2018, and paid dividends to All Good Company of $30,000 on December 15, 2018. Big Bad Company's stock was trading on the open market for $15 per share at the end of the year. Use this information to determine the book value of the investment that should be reported at year end by All Good Company. Round to nearest whole dollar.
2. Allstar Company signed a $200,000 mortgage on July 1, 2018 for the purchase of their new garage building. The mortgage entailed equal monthly payments of $2,800 at the end of each month. The interest rate is 4.0% per year. How much interest expense will be paid on August 31, 2018? (Round your answer to the nearest whole dollar.)
3. On January 1, 2018, Baltimore Company issued $150,000 face value, 5%, 5-year bonds at 102. Interest is paid annually on January 1. Baltimore uses the straight-line method for amortization. Use this information to determine the dollar value of the interest expense for the 2018 fiscal year. Round your answer to the nearest whole dollar.
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