Question

Entries for Investment in Stock, Receipt of Dividends, and Sale of Shares

On February 22, Stewart Corporation acquired 4,200 shares of the 145,000 outstanding shares of Edwards Co. common stock at $41.80 plus commission charges of $840. On June 1, a cash dividend of $0.80 per share was received. On November 12, 1,400 shares were sold at $50 less commission charges of $168.

In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar.

a. Using the cost method, journalize the entry for the purchase of stock.

Feb. 22

b. Using the cost method, journalize the entry for the receipt of dividends.

June 1

c. Using the cost method, journalize the entry for the sale of 1,400 shares.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Nov. 12

Answer 1

No.	Date	Account Titles and explanations	Debit	Credit
a.	Feb.22	Investments- Edwards co. Stock (4,200 × $41.8) + $840	$176,400
		Cash		$176,400
		(To record purchase of stock)
b.	June.1	cash (4,200 × $0.80)	$3,360
		Dividend revenue		$3,360
		(To record receipts of dividend)
c.	Nov.12	Cash (1,400 × $50) - $168	$69,832
		Gain on sale of Investments		$11,032
		Investments- Edwards co. Stock ($176,400/4,200) × 1,400		$58,800
		(To record sale of shares)