Monroe Auto Supplies engaged in several transactions involving short-term equity securities during 2017, shown in the following
Question:
Monroe Auto Supplies engaged in several transactions involving short-term equity securities during 2017, shown in the following list. The company had never invested in equity securities prior to 2017.
1. Purchased 1,000 shares of IBM for $50 per share.
2. Purchased 500 shares of General Motors for $80 per share.
3. Sold 750 shares of IBM for $60 per share.
4. Received a dividend of $1.50 per share from General Motors.
5. Purchased 200 shares of Xerox for $40 per share.
6. Sold the remaining 250 shares of IBM for $30 per share.
7. Sold the 200 shares of Xerox for $58 per share.
8. Sold the 500 shares of General Motors for $60 per share.
a. Prepare journal entries for each transaction.
b. What effect did these transactions have on the company’s 2017 net income?
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
a 1 ShortTerm Equity Investments A 50000 Cash A 50000 Invested in IBM 50000 1000 shares x 50share 2 ShortTerm Equity Investments A 40000 Cash A 40000 ...View the full answer
