Jackson Company engaged in the following investment transactions during the curr
ID: 2484747 • Letter: J
Question
Jackson Company engaged in the following investment transactions during the current year. Feb. 17 Purchased 530 shares of Medical Company common for $20 per share plus a brokerage commission of $100. These are trading securities. April 1 Bought 33,000 of the 100,000 outstanding shares of Olde Company for $330,000. Goodwill of $83,000 was included in the price. June 25 Received a $1.20 per share dividend on Medical Company stock. June 30 Olde Company reported second-quarter profits of $23,000. Oct. 1 Purchased 2,300 shares of Alpha Company for $15 per share plus a brokerage fee of $430. These shares are classified as securities available for sale. Dec. 31 Medical Co. shares are selling for $25 and Alpha stock is selling for $12. Required: Prepare the appropriate journal entries to record the transactions for the year including year-end adjustments.
Explanation / Answer
Journal Entry Date Particulars Dr. Amt. Cr. Amt. Feb-17 Investment in Medical Company Dr. 10,700 To Cash 10,700 Investment in Medical Co. = 530 Shares X $20 + $100 (Comm.) = $10700 Apr-01 Investment in Olde Dr. 330,000 To Cash 330,000 Jun-25 Cash Dr. 636 To Investment Revenue 636 Div recd from Medical Co. = $1.20 X 530 Shares = $636 Jun-30 Investment in Olde (23000 X 33%) Dr. 7,590 To Investment Revenue 7,590 Oct-01 Investment in Alpha Dr. 34,930 To Cash 34,930 Investment in Alpha = 2300 Shares X $15 + $430 (Comm.) = $34930 Dec-31 Investment in Medical Company Dr. 2,550 To Unrealized Holding Gain on Inv. 2,550 Unrealized Holding Gain on Inv. = 530 Shares X $25 - 10700 = $2550 Dec-31 Unrealized holding loss on Inv Dr. 7,330 T0 Fair Value Adjustment in Alpha 7,330 Unrealized Holding Loss on Inv. = 34930 - $12 X 2300 share = $7330
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