Question

On May ​15, 2018​, Mega Co. invests $ 10 comma 000 in Saddle​, Inc. stock. Saddle pays Mega a $ 900 dividend on November ​15, 2018. Mega sells the Saddle stock on December ​10, 2018​, for $ 9 comma 700. Assume the Mega Co. does not have significant influence over Saddle​, Inc. Journalize the 2018 transactions related to Mega​'s investment in Saddle stock. ​(Record debits​ first, then credits. Select the explanation on the last line of the journ

Answer 1

Answer and Explanation:

According to the scenario, Journal Entry of the given data are as follows:

15-5-2018 Equity Investment A/c Dr. $10,000

To Cash A/c $10,000

(Being Investment on purchased stock is recorded)

15-11-2018 Cash A/c Dr. $900

To Dividend Revenue A/c $900

(Being Cash dividend received is recorded)

10-12-2018 Cash A/c Dr. $9,700

Disposal Loss A/c Dr. $300

To Equity Investment A/c $10,000

(Being Disposed off investment is recorded)