On March 10, Fly Corporation acquired 6,000 shares of the 140,000 outstanding shares of Dickson Co.

On March 10, Fly Corporation acquired 6,000 shares of the 140,000 outstanding shares of Dickson Co. common stock at $32 plus commission charges of $240. On July 23, a cash dividend of $1.40 per share was received. On November 22, 2,400 shares were sold at $38, less commission charges of $200.

Using the cost method, journalize the entries for (a) the purchase of stock, (b) the receipt of dividends, and (c) the sale of 2,400 shares.


Answer:

a. Mar. 10 Investments—Dickson Co. Stock* 192,240
Cash 192,240
*(6,000 shares × $32.00) + $240
b. July 23 Cash* 8,400
Dividend Revenue 8,400
*$1.40 × 6,000 shares
c. Nov. 22 Cash* 91,000
Gain on Sale of Investments 14,104
Investments—Dickson Co. Stock** 76,896
*(2,400 shares × $38.00) – $200
**($192,240 ÷ 6,000 shares) × 2,400 shares