Question

Stock Investment Transactions On September 12, 2,000 shares of Aspen Company were acquired at a price of $50 per share plus a $200 brokerage commission. On October 15, a $0.50-per-share dividend was received on the Aspen stock. On November 10, 1,200 shares of the Aspen stock were sold for $42 per share less a $150 brokerage commission. In your computations, round per share amounts to two decimal places. 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. Journalize the entries to record the original purchase, the dividend, and the sale under the cost method.

Answer 1

Answer: Please see answer in explanation column

Step-by-step explanation:

1. Journal to record original purchase.

Date Account Debit Credit

Sept 12 Investment- Aspen stock $100,200.

Cash $100,200.

Calculation

Cash = 2,000 shares x $50 per share = 100,000 + brokerage commission of $200

= $100,200.

2.Journal to record dividend received

Date Account Debit Credit

Oct 15 Cash $1000.

Dividend revenue $1000

Calculation

dividend received = $2000 x $0.50-per-share dividend =$1000

3..Journal to record sale of investment

Date Account Debit Credit

Nov 10 Cash $50,250

Loss from sale $9,870

Investment - Aspen stock $60,120

Calculation

Purchase price of 1 Share in Aspen stock = 100,200/2000 = 50.10 per share

Investment = share sold x purchase amount of 1 share in Aspen stock

1,200 x 50.10= $60,120

Cash = 1,200 shares x $42 per share = 100,000 - brokerage commission of $150

= $50,250