Question

White Paw Co. purchased 11% of the voting stock of Crown, Inc. for $211,000 on 1/1/CY....

White Paw Co. purchased 11% of the voting stock of Crown, Inc. for $211,000 on 1/1/CY. At the end of the year, the market value of the investment is $232,000. Which one of the following is part of the journal entry White Paw will record at year-end?

Select one:

a. Dr. Investment in Crown 211,000

b. Cr. Unrealized gain on securities 21,000

c. Cr. Realized gain on securities 21,000

d. Dr. Investment in Crown 232,000

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Homework Answers

Answer #1

b. Cr. Unrealized gain on securities 21,000

Reason:-

The investment price has been increased from $232,000 to $211,000. This shows a profit of $21000. However, securities are still kept, therefore, it will be unrealized gain. on securities.

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