Record Christopher Corporation’s journal entry for each of the following events.

Question

Record Christopher Corporation’s journal entry for each of the following events. After each entry, indicate the balances that will be reported on Christopher Corporation’s balance sheet at that date.

a. Christopher Corporation purchases 1,000 shares of stock in Alpha Company for $30 per share on July 7, Year Two. This investment is considered an available-for-sale security.

b. At the end of Year Two, Alpha Company’s stock is selling for $25 per share.

c. At the end of Year Three, Alpha Company’s stock is selling for $28 per share.

d. On February 16, Year Four, Alpha Company pays a $0.60 per share cash dividend to its

stockholders.

e. On March 27, Year Four, Christopher sells all of these shares for $36 per share in cash.

Explanation / Answer

Year 1 Year 2 Year 3 Year 4 Fair Value/Sales of Alpha Stock         25,000        28,000        36,000 Less: Cost of the Stock        30,000         30,000        25,000        28,000 Profit/(Loss)         -5,000           3,000           8,000 Dividend 600 Profit/(Loss) will be reported In P& L Account                  -           -5,000           3,000           8,600 Investment will be shown in Balance sheet        30,000         25,000        28,000 0

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