Friday, 6 June 2014

Prepare journal entries to record the following transactions involving the short-term securities investments of Duke Co., all of which occurred during year 2013. a. On March 22, purchased 800 shares of RIP Company stock at $19 per share plus a $350 brokerage fee. These shares are categorized as trading securities.

Prepare journal entries to record the following transactions involving the short-term securities investments of Duke Co., all of which occurred during year 2013.

 
a.
On March 22, purchased 800 shares of RIP Company stock at $19 per share plus a $350 brokerage fee. These shares are categorized as trading securities.

 
b.
On September 1, received a $3 per share cash dividend on the RIP Company stock purchased in transaction a.
 
c.
On October 8, sold 400 shares of RIP Co. stock for $29 per share, less a $340 brokerage fee.
 

Explanation:
a. Purchased 800 shares of stock for (800 × $19) + $350 brokerage fee = $15,550

b. Received dividend on stock (800 × $3) = $2,400

c. Sold 400 shares of stock.
Cash = [(400 × $29) − $340] = $11,260
Short-term investments—trading (RIP) = ($15,550/2) = $7,775