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Assessing Financial Statement Effects of Passive Investments in Equity Securities For the following transactions involving investments in marketable securities, assume that: (1) Ohlson Co. purchases
Assessing Financial Statement Effects of Passive Investments in Equity Securities For the following transactions involving investments in marketable securities, assume that: (1) Ohlson Co. purchases 5,000 common shares of Freeman Co. at $16 cash per share. (2) Ohlson Co. receives a cash dividend or $1.25 per common share from Freeman (3) Year-end market price of Freeman common stock is $17.50 per share. (4) Ohlson Co. sells all 5,000 common shares of Freeman for $86,400 cash. a. Prepare journal entries to record the four transactions. b. Post the journal entries from a to their respective T-accounts. c. Record each of the transactions from a in the financial statement effects template. a. General Journal Description Debit Credit (1) 4 (2) (3) (4) Cash > > b. Cash (A) Investment in Freeman Co.(A) Unrealized Gain (R) (1) (1) Loss on Sale of Investment in Freeman Co. (E) (1) (2) 3) (2) (2) (2) (3) (3) (4) (4) (4) Dividend Income (R) (1) (2) (3) (4) C. Income Statement Liabilities $ + Contrib. Capital + Earned Capital $ + $ Balance Sheet Transaction Cash Asset + Noncash Assets - (1) Purchase 5,000 common shares of Freeman Co. at $16 cash per shares (2) Dividend income of $1.25 per share from Freeman Co (3) Increase in investment of Freeman Co. (4) Sale of Freeman Co. for $86,400 cash Revenues. Expenses $ - Net Income - $ + + + + + +
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