Hulse Company had the following transactions pertaining to stock investments. Feb. 1 Purchased 600 shares of Wade common stock (2%) for $7,200 cash. July 1 Received cash dividends of $1 per share on Wade common stock. Sept. 1 Sold 300 shares of Wade common stock for $4,300. Dec. 1 Received cash dividends of $1 per share on Wade common stock. Instructions (a) Journalize the transactions. (b) Explain how dividend revenue and the gain (loss) on sale should be reported in the income statement.

(b) Dividend will be shown as other income in the revenue section of Income statement. Gain on sale of common share will be reported on income statement after operating profit.

Explanation:

Per Share Purchase Price = 7200 / 600 = $12

300 Shares Purchase Price = $12 x 300 = 3,600

Tundexi Tundexi · Answer 2 · 2021-11-11T14:32:00+01:00

Preparation of Journal entries for the transactions.

Date Account titles and Explanation Debit Credit

Feb-01 Stock Investment $7200

Cash $7200

(To record investment purchased)

Jul-01 Cash $600

Dividend Revenue $600

(To record dividend received)

Sep-01 Cash $4300

Stock Investment $3600

Gain on sale of investment $700

(To record sale of investment)

Dec-01 Cash $300

Dividend Revenue $300

(To record dividend received)

b. The Dividend will be inputted as other income in the Revenue section of Income statement.

The gain on sale of common share reflect on the income statement after the Operating profit.

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