Question

Stock Investment Transactions On September 12, 3,600 shares of Aspen Company are acquired at a price of $45.00 per share plus a $180 brokerage commission. On October 15, a $1.20-per-share dividend was received on the Aspen Company stock. On November 10, 1,440.00 shares of the Aspen Company stock were sold for $38 per share less a $72 brokerage commission. When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method.

Answer 1

Answer and Explanation:

According to the scenario, journal entries for the given data are as follows:

Journal Entries

Sep. 12 Stock investment in Aspen company A/c Dr. $162,180 (3,600×$45)+$180

To Cash A/c $162,180

( Being purchase is recorded)

Oct. 15 Cash A/c Dr. $4320 (3,600×$1.2)

To Revenue from dividend A/c $4320

( Being dividend revenue is recorded )

Nov. 10 Cash A/c Dr. $54,648 (1,440×$38)-$72

Loss due to sale of investment A/c Dr. $10,224 ($64,872 - $54,648)

To Investment in Aspen company investment A/c $64,872 (1,440× $45)+$72

( Being sale is recorded)