On February 15, Jewel Company buys 6,700 shares of Marcelo Corp. common stock at

Question

On February 15, Jewel Company buys 6,700 shares of Marcelo Corp. common stock at $28.66 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Marcelo Corp. declares a dividend of $1.18 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $29.43 per share less a brokerage fee of $250. The journal entry to record the dividend on April 15 is: Debit Cash $7,906; credit Interest Revenue $7,906. Debit Cash $7,048; credit Interest Revenue $7,048. Debit Cash $7,048; credit Dividend Revenue $7048. O Debit Cash $7,906; credit Gain on Sale of Investments $7,906 Debit Cash $7,906; credit Dividend Revenue $7,906.

Explanation / Answer

Dividend received from available for sale securities is recorded in the income statement as dividend Revenue. So the receipt of dividend is recognised as dividend revenue.

Amount of dividend received = 6700 * $1.18 = $7,906.

The entry would be:

Debit Cash $7,906; credit Dividend Revenue $7,906.

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