Clark Company acquired 15% of the 500,000 shares of common stock of Davis Company at a total cost of $25.75 per share on June 1, 2025. On October 1, Davis Company declared and paid a $50,000 cash dividend. On December 31, Davis Company stock had a market price of $27.00 per share and the company reported net income of $1,250,000 for the year. The securities are classified as trading. Prepare all journal entries for 2025. June 1 Oct 1 Dec 31 Use the information above: Assume Clark Company acquired 40% of the shares of Davis Company. June 1 Oct 1 Dec 31
When something happens in a business and it can be quantified and stated in monetary terms, it should be documented as a transaction in the books of accounts. A first entry of this kind is made in the Journal. Hence a book of original or prime entries is another name for a journal. The initial journal entries are then posted to the ledger accounts. The journal includes a chronological list of transactions together with any appropriate annotations or details. An entry or item in a journal is known as a journal entry. It translates a transaction into bookkeeping language and indicates the accounts that will be credited or debited. Making a journal entry demonstrates how a transaction has an impact on the business.
Step by step
Solved in 3 steps with 4 images
