Required: Journalize the entries to record the above selected equity investment

Question

Required:

Journalize the entries to record the above selected equity investment transactions completed by Perry Company during the current year. Perry accounts for this investment using the cost method. Refer to the Chart of Accounts for exact wording of account titles.

February 2 Purchased for cash 900 shares of Dexter Co. stock for $54 per share plus a $450 brokerage commission. This represents a less than 10% ownership interest in the company. April 16 Received dividends of $0.25 per share on Dexter Co. stock. June 17 Sold 200 shares of Dexter Co. stock for $70 per share less a $500 brokerage commission. August 19 Purchased 600 shares of Dexter Co. stock for $65 per share plus a $300 brokerage commission. November 14 Received dividends of $0.30 per share on Dexter Co. stock.

Explanation / Answer

Feb 2 (900 shares* $54) + $450

Apr 16 - (900 shares *$0.25)

June 17 - (200 shares* $70) - $500 ,

**$49,050 / 900 = $54.50 share price

Aug -19 (600 shares* $65) + $300

Nov- 14 (900 - 200 + 600) = 1,300 shares* $0.30
     $54.50 x 200 = $10,900

Dr.Investments—Dexter Co. Stock $49,050 Cr. Cash A/c $49,050 Dr. Cash A/c $225 Cr. Dividend A/c $225 Dr. Cash a/c $13,500 Cr. Investment In stock Dexter Co. $10900 Cr. gain on sale of investment $2,600

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