On February 15, Jewel Company buys 7,400 shares of Marcelo Corp. common stock at

Question

On February 15, Jewel Company buys 7,400 shares of Marcelo Corp. common stock at $28.57 per share plus a brokerage fee of $420. The stock is classified as available-for-sale securities. On March 15, Marcelo declares a dividend of $1.19 per share payable to stockholders of record on April 15. Jewel received the dividend on April 15 and ultimately sells half of the Marcelo stock on November 17 of the current year for $29.34 per share less a brokerage fee of $270. The journal entry to record the purchase on February 15 is:

A. DebitLong-Term Investments-Trading $211,418; credit Cash $211,418.

B. Debit Long-Term Investments-AFS $211,418; credit Cash $211,418.

C. DebitLong-Term Investments-HTM $217,116; credit cash $217,116

D. DebitLong-Term Investments-Trading $211,838; credit Cash $211,838.

E. Debit Long-Term Investments-AFS $211,838; credit Cash $211,838.

Please add explanation

On February 15, Jewel Company buys 7,400 shares of Marcelo Corp. common stock at $28.57 per share plus a brokerage fee of $420. The stock is classified as available-for-sale securities. On March 15, Marcelo declares a dividend of $1.19 per share payable to stockholders of record on April 15. Jewel received the dividend on April 15 and ultimately sells half of the Marcelo stock on November 17 of the current year for $29.34 per share less a brokerage fee of $270. The journal entry to record the purchase on February 15 is:

Explanation / Answer

Journal entry on purchase :

so answer is E) Debit Long-Term Investments-AFS $211,838; credit Cash $211,838

Date accounts & explanation debit credit Feb15 Long term investment -AFS 211838       Cash a/c (7400*28.57+420) 211838 (To record purchase of investment)

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