Question

Accounting for Equity Securities—Noninfluential
The Dale Company had the following transactions and adjustment related to a stock investment:

2016
Nov. 15	Purchased 5,000 shares of Lake, Inc.’s common stock at $17 per share plus a brokerage commission of $900. Dale Company expects to sell the stock in the near future.
	Dale is unable to exercise any significant control over Lake.
Dec. 22	Received a cash dividend of $2.25 per share of common stock from Lake.
Dec. 31	Made the adjusting entry to reflect year‑end fair value of the stock investment in Lake. The year‑end market price of the Lake common stock is $18.50 per share.
2017
Jan. 20	Sold all 5,000 shares of the Lake common stock for $86,400.

Record the transactions and adjustment for Dale Company using journal entries.

Answer 1

Journal Entry- The Dale Company
Date	General Journal	Debit	Credit
15-Nov	Trading Securities- Lake Securities ( 5000 share X $17) + 900	$85,900.00
	Cash		$85,900.00
	TO Record Investment Made in securities
22-Dec	Cash (5000 Share X 2.25)	$11,250.00
	Dividend Income		$11,250.00
	To Record Dividend Received
31-Dec	Trading Securities- Lake Securities (18.50X5000-85900)	$6,600.00
	Unrealised Gain/ loss - OCI		$6,600.00
	To Record Unrealised Gain
20-Jan	Cash	$86,400.00
	Realised Loss on Sale of Trading Securities (bf)	$6,100.00
	Trading Securities- Lake Securities (5000ShareX 18.50)		$92,500.00