On January 4, Year 1, Barber Company purchased 11,500 shares of Convell Company for $138,000 plus a broker's fee of $3600. Convell Company has a total of 57,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.75 per share, and its net income was $111,000 and $106,000 for Year 1 and Year 2, respectively. The January 12, Year 3, entry to record Barber's sale of 6900 shares of Convell Company stock, which represents 60% of Barber's total investment, for $93,150 cash should be:
A. Debit Cash $93,150; credit Gain on Sale of Investment $8190; credit Equity Method Investments $84,960.
B. Debit Cash $93,150; debit Loss on Sale of Investment $48,450; credit Equity Method Investments $141,600.
C. Debit Cash $93,150; credit Gain on Sale of Investment $17,250; credit Equity Method Investments $75,900.
D. Debit Cash $93,150; debit Loss on Sale of Investment $7500; credit Equity Method Investments $100,650.
E. Debit Cash $93,150; debit Loss on Sale of Investment $17,250; credit Equity Method Investments $110,400.
Answer: D
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