Prepare journal entries to record the following transactions involving the short-term securities investments of Smart Co., all of which occurred during year 2011.
On March 22, purchased 870 shares of FIX Company stock at $15 per share plus a $190 brokerage fee. These shares are categorized as trading securities.
(Dr) Short term investment trading (FIX) – 13240
(Cr) Cash – 13240
On September 1, received a $3 per share cash dividend on the FIX Company stock purchased in transaction a.
(Dr) Cash – 2610
(Cr) Dividend Revenue – 2610
On October 8, sold 435 shares of FIX Co. stock for $25 per share, less a $180 brokerage fee.
(Dr) Cash – 10695
(Cr) Short term investment trading (FIX) – ???
(Cr) Gain on sale of short term investments – ???
Accounting Short Term Investments Need Help?
By Money F Posted in: Cash
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The dividends had no affect on the investment account. So the last entry would be:
435 / 870 x 13,240 = $6,620 amount of investment sold
(Dr) Cash – 10,695
(Cr) Short term investment trading (FIX) – 6,620
(Cr) Gain on sale of short term investments – 4,075