Brief Exercise 12-2 On August 1, Shaw Company buys 1,000 shares of Estrada commo

Question

Brief Exercise 12-2

On August 1, Shaw Company buys 1,000 shares of Estrada common stock for $25,000 cash. On December 1, Shaw sells the stock investments for $32,000 in cash.

Journalize the purchase and sale of the common stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Aug. 1Dec. 1

Aug. 1Dec. 1

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Aug 1 Equity investment 25000 Cash 25000 (To record purchase of investment) Dec 1 Cash 32000 Equity investment 25000 Gain on sale of investment 7000 (To record sale of investment)

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