Question

On February 10, 15,000 shares of Sting Company are acquired at a price of $25 per share plus a $150 brokerage commission. On April 12, a $0.40-per-share dividend was received on the Sting Company stock. On May 29, 6,000 shares of the Sting Company stock were sold for $32 per share less a $120 brokerage commission.

Answer 1

Solution:

Journal entries:

No.of event	Date	Account title and explanation	Debit	Credit
1.)	Feb. 10	Investment - Sting company stock (15000 shares × $25)+$120	$375,150
		Cash		$375,150
		(To record purchase of shares)
2.	Apr.12	Cash	$6,000
		Dividend Revenue		$6,000
		(To record receipt of dividend revenue)
3.)	May 29	Cash (6000 shares × $32)-$120	$191,880
		Gain on sale of investment investments		$41,820
		Investments company		$150,060
		(To record sale of shares)

* now we see, 3rd journal entry.

Investments company (6,000 ×$25) +60(commission )

=$150,000+ $60

=150,060

Commission on 1 share =$150/15,000

Then, commission on 6000 shares

= $150/15,000 shares × 6,000 shares

=$60

Then gain,

$191,880 - $150,060

=$41,820