Present entries to record the following selected transactions of Masterson Co. (

Question

Present entries to record the following selected transactions of Masterson Co.



(a) Purchased 600 shares of the 100,000 shares outstanding $10 par common shares of Dankin Corporation for $5,100.

(b) Purchased 3,500 shares of the 10,000 shares no par common shares of Ramon Co. for $45,700. The investment was accounted for by the equity method.

(c) Received a cash dividend of $1 per share on the Dankin Corporation stock acquired in (a).

(d) Received a cash dividend of $2 per share on the Ramon Co. stock acquired in (b).

(e) Sold 100 shares of the Dankin Corporation shares acquired in (a) for $2,100.

(f) Recorded the appropriate share of Ramon Company’s net income of $50,000. The stock was acquired in (b).

Explanation / Answer

a.Invesment in Dankin Shares 5100 Dr. Cash 5100 Cr. b.Investment in Roman Sahres Dr. 45700 Cash Cr. 45700 c. Cash 600 Dr. Dividend Income Cr. 500 ( under cost method) d.Cash 7000 Dr. Investment in Roman Shares 7000 Cr. e. Cash 2100 Dr. Investment in Dankin Shares 850 Cr Gain on sales of investment 1250 Cr f. Investment in Roman Shares 17500 Dr Income on investment 17500 Cr.

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