Princeton Company acquired some of the 60,000 outstanding shares of the common s

Question

Princeton Company acquired some of the 60,000 outstanding shares of the common stock of Cox Corporation as trading securities. The accounting period for both companies ends December 31. Assume that Princeton Company purchased the voting stock of Cox Corporation for its portfolio of available-for-sale securities instead of its trading securities portfolio. July 2 Purchased 8,400 shares of Cox common stock at $25 per share. Dec. 15 Cox Corporation declared and paid a cash dividend of $4 per share. Dec. 31 Determined the fair value of Cox stock to be $26 per share. Required: Prepare the journal entries for each of the above transactions listed. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record the purchase of 8,400 shares of Cox common stock at $25 per share. Note: Enter debits before credits. Date General Journal Debit Credit Jul 02 Record entry Clear entry View general journal

Explanation / Answer

Available for sale securities Debit                      210,000 Bank Credit                      210,000 ( 8400 shares X 25 per share) Bank Debit                        33,600 Dividend Income Credit                        33,600 ( 4 x 8400 shares) Dividend Income Debit                        33,600 P&L Credit                        33,600 Available for sale securities Debit                          8,400 Other Comprehensive Income Credit                          8,400 (fair value adjustement) (26-25 X 8400)

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