Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Chapter 15, Problem 15.7EX
To determine
Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The stock investment transactions in the books of Company R
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Entries for Investment in Stock, Receipt of Dividends, and Sale of Shares
The following equity investment transactions were completed by Romero Company during a recent year:
Apr. 10.
July 8.
Purchased 1,800 shares of Dixon Company for a price of $57.75 per share plus a brokerage commission of $450.
Received a quarterly dividend of $0.35 per share on the Dixon Company investment.
Sept. 10. Sold 1,200 shares for a price of $52 per share less a brokerage commission of $250.
Journalize the entries for these transactions. If required, round the final answers to the nearest dollar.
For a compound transaction, if an amount box does not require an entry, leave it blank.
Apr. 10 - Purchase Investments-Dixon Company Stock
Cash
✓
K
July 8 Dividend
Cash
✓
Dividend Revenue
Sept. 10 Sale
Cash
✓
Loss on Sale of Investments
Investments-Dixon Company Stock
✓
The following equity investment transactions were completed by Romero Company during a recent year:
Apr. 10.
Purchased 2,800 shares of Dixon Company for a price of $61.5 per share plus a brokerage commission of $1,400.
July 8.
Received a quarterly dividend of $0.7 per share on the Dixon Company investment.
Sept. 10.
Sold 1,900 shares for a price of $55 per share less a brokerage commission of $780.
Journalize the entries for these transactions. If required, round the final answers to the nearest dollar.
For a compound transaction, if an amount box does not require an entry, leave it blank.
Apr. 10 - Purchase
July 8 - Dividend
Sept. 10 - Sale
Entries for Investment in Stock, Receipt of Dividends, and Sale of Shares
On February 22, Stewart Corporation acquired 8,700 shares of the 305,000 outstanding shares of Edwards Co. common stock at $23.90 plus commission charges of $870. On June 1, a cash dividend of $1.10 per share was received. On November 12, 2,900 shares were sold at $29 less commission charges of $348.
In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar.
a. Using the cost method, journalize the entry for the purchase of stock.
Feb. 22
fill in the blank 18df41fb2fe9030_2
fill in the blank 18df41fb2fe9030_4
b. Using the cost method, journalize the entry for the receipt of dividends.
June 1
fill in the blank 30462dfb4fb1043_2
fill in the blank 30462dfb4fb1043_4
c. Using the cost method, journalize the entry for the sale of 2,900 shares.
For a compound transaction, if an amount box…
Chapter 15 Solutions
Accounting
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