Exercise 16-4 Journalize the transactions. II. Explain how dividend revenue and

Question

Exercise 16-4

Journalize the transactions.

II.

Explain how dividend revenue and the gain (loss) on sale should be reported in the income statement.

Exercise 16-4

Hulse Company had the following transactions pertaining to stock investments. Feb. 1 Purchased 420 shares of Wade common stock (2%) for $5,040 cash. July 1 Received cash dividends of $1 per share on Wade common stock. Sept. 1 Sold 210 shares of Wade common stock for $2,730. Dec. 1 Received cash dividends of $1 per share on Wade common stock.

Explanation / Answer

Amount (in $) Year Particulars Debit Credit Feb. 1 Stock Investments 5040.00       Cash 5040.00 Jul-01 Cash 420.00      Dividend Revenue 420.00 Sept.1 Cash 2730.00      Stock Investments 2520.00      Gain on Sale of Stock Investment 210.00 Dec.1 Cash 210.00      Dividend Revenue 210.00 Dividend revenue and the gain on sale of stock investments are reported under other gains and revenues in the income statement.

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