Jackson Company engaged in the following investment transactions during the curr

Question

Jackson Company engaged in the following investment transactions during the current year. Purchased 500 shares of Medical Company common stock for $20 per share plus a brokerage commission of $100 Jackson does not have significant influence over Medical Feb. 17 Bought 30,000 of the 100,000 outstanding shares of Qlde Company for $300,000. Goodwill of $80,000 was included in the price April 1 Received a $1.20 per share dividend on Medical Company stock. June 25 June 30 Oct. 1 Qlde Company reported second-quarter profits of $20,000 Purchased 2,000 bonds of Alpha Company for $15 per bond plus a brokerage fee of $400. These bonds are classified as securities available for sale Dec. 31 Medical Co. shares are selling for $25 and Alpha bonds are selling for $12. Required: Prepare the appropriate journal entries to record the transactions for the year including year-end adjustments. Show calculations

Explanation / Answer

Journal Entry Date Account Tittle & Explanation Debit Credit Feb-17 Investment in Medical $10,100.00 Cash (($500X $20)+$100) $10,100.00 (To Record Purchase 500 Shares) Apr-01 Investment in Olde $300,000.00 Cash $300,000.00 To Record Purchase of Olde Company Share Jun-25 Cash (500X$1.20) $600.00 Investment Revenue $600.00 To Record Dividend Received from Medical Company Jun-30 Investment in Olde ($20000X30%) $6,000.00 Investment Revenue $6,000.00 To Record Share of profit in olde Company Oct-01 Investment in Alpha ((2000X$15)+$400) $30,400.00 Cash $30,400.00 To Record Purchase of Alpha Company Share Dec-31 Fair Avlue adjustement, Medical ((500X$25)-$10100) $2,400.00 Net Unrealized Holding Gain/Loss $2,400.00 To Record adjustment in Fair value 31-Dec Net Unrealizable Holding Gain/Loss-OCI $6,400.00 Fair Value Adjustment , Alpha ( (2000X $12)-$30400) $6,400.00 To Record adjustment in Fair value

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