Question

The following equity investment transactions were completed by Romero Company during a recent year:

Apr.	10	Purchased 4,900 shares of Dixon Company for a price of $53 per share plus a brokerage commission of $85.
July	8	Received a quarterly dividend of $0.80 per share on the Dixon Company investment.
Sept.	10	Sold 1,300 shares for a price of $40 per share less a brokerage commission of $85.

JOURNAL ACCOUNTING EQUAT DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES

Answer 1

April-10

Investment in Dixon Co account Debit $259,785

To Cash account.............................................Credit $259,785

(4,900 * $53) + $85 = $259,785

July-08

Cash account...........................Debit $3,920

To Dividend Revenue account..Credit $3,920

Sept-10

Cash account........................Debit $51,915

Loss on sale of investment.. .Debit $17,007.55

To Investment in Dixon Co account.. Credit $68,922.55

(Investment in Dixon Co = $259,785 * (1300 / 4900) = $68,922.55

[Cash account (1,300 * $40) - $85 = $51,915]