On February 1, Rinehart Company purchased 500 shares (2% ownership) of Givens Company common stock for $32 per share. On March 20, Rinehart Company sold 100 shares of Givens stock for $2,900. Rinehart received a dividend of $1.00 per share on April 25. On June 15, Rinehart sold 200 shares of Givens stock for $7,600. On July 28, Rinehart received a dividend of $1.25 per share. Prepare the journal entries to record the transactions described above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)

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Dryomys Dryomys · Answer 1 · 2019-11-13T06:56:58+01:00

Answer:

The journal entries are as follows:

(i) On February 1,

Stock investment A/c (500 × 32) Dr. $16,000

To cash $16,000

(To record share purchase)

(ii) On March 20,

Cash A/c Dr. $2,900

Loss on sale of stock investment A/c Dr. $300

To stock investment [16,000 × (100 ÷ 500)] $3,200

(To record share sale)

(iii) On April 25,

Cash A/c (500 - 100) Dr. $400

To dividend revenue $400

(To record receipt of dividend)

(iv) On June 15,

Cash A/c Dr. $7,600

To Gain on sale of stock investment $1,200

To stock investment [16,000 × (200 ÷ 500)] $6,400

(To record share sale)

(v) On July 28,

Cash A/c[(500 - 100 - 200) × 1.25] Dr. $250

To dividend revenue $250

(To record receipt of dividend)