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The following equity investment transactions were completed by Romero Company during a recent year:

Apr. 10 Purchased 3,600 shares of Dixon Company for a price of $51 per share plus a brokerage commission of $95.
July 8 Received a quarterly dividend of $0.95 per share on the Dixon Company investment.
Sept. 10 Sold 2,000 shares for a price of $41 per share less a brokerage commission of $75.
Journalize the entries for these transactions.

User Mayeul Sgc
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1 Answer

5 votes

Answer:

The journal entries will look as follows:

Step-by-step explanation:

Date Particulars Dr ($) Cr ($)

Apr 10 Investments - Dixon (w.1.) 183,695

Cash (w.1.) 183.695

(To record total value of investment in Dixon Company.)

July 8 Cash 3,420

Dividend revenue (w.2.) 3,420

(To record dividend revenue from Dixon Company shares.)

Sept. 10 Cash (w.3.) 81,925

Loss on investment sold (w.5.) 20,128

Investments - Dixon (w.4.) 102,053

(To record sales of investment in Dixon Company.)

Workings:

w.1. Total value of investment in Dixon Company = (3,600 * $51) + $95 = $183,695

w.2. Dividend revenue = 3,600 * $0.95 = $3,420

w.3. = Cash = (2,000 * 41) - $75 = $81,925

w.4. Value of investment in Dixon = ($183,695 / $3,600) * 2,000 = $102,053

w.5. Loss on sale of investment = w.3. - w.4. = $102,053 - $81,925 = $20,128

User Thorsten Engler
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