On February 10, 20,000 shares of Sting Company are acquired at a price of $26 per share plus a $170 brokerage commission. On April 12,
On February 10, 20,000 shares of Sting Company are acquired at a price of $26 per share plus a $170 brokerage commission. On April 12, a $0.40-per-share dividend was received on the Sting Company stock. On May 29, 5,900 shares of the Sting Company stock were sold for $30 per share less a $130 brokerage commission.
Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar.
CHART OF ACCOUNTS |
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General Ledger |
| ASSETS | 110 | Cash | 111 | Petty Cash | 120 | Accounts Receivable | 121 | Allowance for Doubtful Accounts | 131 | Notes Receivable | 132 | Interest Receivable | 141 | Merchandise Inventory | 145 | Office Supplies | 161 | Investments-Sting Company Stock | 165 | Valuation Allowance for Trading Investments | 166 | Valuation Allowance for Available-for-Sale Investments | 181 | Land | 193 | Office Equipment | 194 | Accumulated Depreciation-Office Equipment | | LIABILITIES | 210 | Accounts Payable | 221 | Notes Payable | 231 | Interest Payable | 241 | Salaries Payable | | EQUITY | 311 | Common Stock | 312 | Paid-In Capital in Excess of Par-Common Stock | 321 | Preferred Stock | 322 | Paid-In Capital in Excess of Par-Preferred Stock | 331 | Treasury Stock | 332 | Paid-In Capital from Sale of Treasury Stock | 340 | Retained Earnings | 350 | Unrealized Gain (Loss) on Available-for-Sale Investments | 351 | Cash Dividends | 352 | Stock Dividends | 390 | Income Summary Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar. PAGE 10 JOURNAL | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | 1 | | | | | | 2 | | | | | | 3 | | | | | | 4 | | | | | | 5 | | | | | | 6 | | | | | | 7 | | | | | | | | | REVENUE | 410 | Sales | 611 | Interest Revenue | 612 | Dividend Revenue | 621 | Income of Sting Company | 631 | Gain on Sale of Investments | 641 | Unrealized Gain on Trading Investments | | EXPENSES | 511 | Cost of Merchandise Sold | 512 | Bad Debt Expense | 516 | Cash Short and Over | 520 | Salaries Expense | 531 | Advertising Expense | 534 | Selling Expenses | 535 | Rent Expense | 537 | Office Supplies Expense | 562 | Depreciation Expense-Office Equipment | 590 | Miscellaneous Expense | 710 | Interest Expense | 721 | Loss of Sting Company | 731 | Loss on Sale of Investments | 741 | Unrealized Loss on Trading Investments | |