Question
CBA Corporation purchases 3% of the common stock of ZYX Corporation on December 27, 2019. CBA pays $7,300 for the stock. On December 31, 2019,
CBA Corporation purchases 3% of the common stock of ZYX Corporation on December 27, 2019. CBA pays $7,300 for the stock. On December 31, 2019, the stock has a market value of $7,800. ZYX reports earnings for the year ended December 31, 2019 of $60,000 and paid $15,000 in dividends during the year. CBA intends to hold the stock for several years.
a) What is the journal entry to record the purchase of the security on December 27, 2019:
b) What is (are) the necessary adjusting entry (entries) on December 31, 2019 under Generally Accepted Accounting Principles?
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