2 Nagen Company had these transactions pertaining to stock investments: eb. 1 Pu

Question

2 Nagen Company had these transactions pertaining to stock investments: eb. 1 Purchased 3,000 shares of Horton Company (10%) for $49,800 cash plus brokerage fees of $1,200. June 1 Received cash dividends of $2 per share on Horton stock. Oct. 1 Sold 1,200 shares of Horton stock for $24,000 less brokerage fees of $600. The entry to record the purchase of the Horton stock would include a (SHOW FULL ENTRY for ANY credit). Feo encX-ince 4M0 a. debit to Stock Investments for $49,800. b. credit to Cash for $49,800. c. debit to Stock Investments for $51,000 d. debit to Investment Expense for $1,200. caeh Jun I caeh (3000x2

Explanation / Answer

Brokerage fee also will consider as cost of investment while accounting purchase of investment.

So Journal entry will be:

Answer is: C. Debit to stock investments for $51,000

Debit to stock investment ($49,800+$1,200) $ 51,000 Credit to Cash $ 51,000

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