Chapter AE, Problem AE.2E

$\begin{array}{c}\begin{array}{l}\text{Realized}\text{gain}\left(\text{loss}\right)\\ \text{on}\text{investments}\end{array}\}\text{=}\left[\begin{array}{l}\text{Cash}\text{received-}\\ \text{cost}\text{of}\text{stock}\text{investment}\end{array}\right]\\ \text{=\$5,400-\$3,500}\\ \text{=\$1,900}\end{array}$

(a)

To determine

Stock Investments: It refers to the investment in a financial instrument known as stock that, gives the right of ownership to an investor equal to the amount invested in the company. Thus, it enables a stockholder to claim in the profits and the assets of the company.

To Record: The stock transactions in the books of Company S.

(b)

To determine

To Report: The dividend revenue and the gain (loss) on sale in the income statement.