Question

Swifty Co. had purchased 230 shares of Washington Co. for $38 each this year (Oregon Co. does not have significant influence). Swifty Co. sold 115 shares of Washington Co. stock for $44 each. At year-end, the price per share of the Washington Co. stock had dropped to $33. Prepare the journal entries for these transactions and any year-end adjustments.

Answer 1

Swifty Co.

Journal Entries:

1. Investment in Washington Co. $8,740

Credit Cash $8,740

To record the purchase of 230 shares of Washington Co. for $38 each this year

2. Cash $5,060

Credit Investment in Washington $4,370

Credit Gain from Sale of Investment in Washington $690

To record the sale of 115 shares for $44 and the realized gain.

3. Debit Unrealized Loss $575

Credit Investment in Washington Co. $575

To record the change in price of 115 shares at year-end.

Step-by-step explanation:

a) Data and Analysis:

1. Investment in Washington Co. $8,740 Cash $8,740

purchased 230 shares of Washington Co. for $38 each this year

2. Cash $5,060 Investment in Washington $4,370 Gain from Sale of Investment in Washington $690

sale of 115 shares for $44.

3. Unrealized Loss $575 Investment in Washington Co. $575

Price per share dropped to $33 (230 - 115) * ($38 - $33)