Question

On January 23, 15,000 shares of Tolle Company are acquired at a price of $25 per...

On January 23, 15,000 shares of Tolle Company are acquired at a price of $25 per share plus a $140 brokerage commission. On April 12, a $0.35-per-share dividend was received on the Tolle Company stock. On June 10, 5,200 shares of the Tolle Company stock were sold for $31 per share less a $115 brokerage commission.

Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar.

CHART OF ACCOUNTS
General Ledger
ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
121 Allowance for Doubtful Accounts
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
145 Office Supplies
161 Investments-Tolle Company Stock
165 Valuation Allowance for Trading Investments
166 Valuation Allowance for Available-for-Sale Investments
181 Land
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
231 Interest Payable
241 Salaries Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Treasury Stock
332 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
350 Unrealized Gain (Loss) on Available-for-Sale Investments
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
611 Interest Revenue
612 Dividend Revenue
621 Income of Tolle Company
631 Gain on Sale of Investments
641 Unrealized Gain on Trading Investments
EXPENSES
511 Cost of Merchandise Sold
512 Bad Debt Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
534 Selling Expenses
535 Rent Expense
537 Office Supplies Expense
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
721 Loss of Tolle Company
731 Loss on Sale of Investments
741 Unrealized Loss on Trading Investments
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Answer #1
Date General journal Debit Credit
Jan 23. Investments-Tolle Company Stock 375140
Cash (15000*25)+140 375140
(Shares of tolle company acquired)
April 12. Cash (15000*0.35) 5250
Dividend revenue 5250
(Dividend received on the Tolle Company stock)
June 10. Cash (5200*31)-115 161085
Investments-Tolle Company Stock (Note:1) 130052
Gain on Sale of Investments (Plug) 31033
(Tolle Company stock were sold)
Note:1
Cost per shares purchased=375140/15000=$ 25.01
Cost of 5200 shares=5200*25.01=$ 130052
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