Question

On June 20, Blaney Company purchased 2,000 shares of ABC Company common stock for $32 per...

On June 20, Blaney Company purchased 2,000 shares of ABC Company common stock for $32 per share plus a $75 brokerage fee.

These shares are categorized as short-term investment in trading securities.

On September 8, Blaney Company receives $.60 per share in dividends from ABC Company. A correct entry to receord the receipt of the dividends is:

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Answer #1

Number of shares = 2,000

Dividend per share = $0.60

Total dividend = Number of shares x Dividend per share

= 2,000 x 0.60

= $1,200

The journal entry to record the receipt of dividend will be as under :

Journal

Account Title Debit Credit
Cash 1,200
Dividend received 1,200

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