Hulse Company had the following transactions pertaining to stock investments:
|Feb. 1||Purchased 560 shares of Wade common stock (2%) for $5,600 cash.|
|July 1||Received cash dividends of $1 per share on Wade common stock.|
|Sept. 1||Sold 280 shares of Wade common stock for $4,760.|
|Dec. 1||Received cash dividends of $2 per share on Wade common stock.|
(a) Journalize the transactions.
(b) Explain how dividend revenue and the gain (loss) on the sale should be reported in the income statement.
Investment in stocks:
Buying stocks or other security are considered as an investment in the organization. We can purchase stock from the primary market or the secondary market. The gain on sale of investment should be reported in the income statement as non operating income. Dividend received by the organization should be reported as other income.
Answer and Explanation:
|1-Jul||Cash a/c (560 * 1 ) Dr.||560|
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from Intro to Business: Help and ReviewChapter 25 / Lesson 16