Prepare journal entries to record the following transactions involving the short

Question

Prepare journal entries to record the following transactions involving the short-term securities investments of Duke Co., all of which occurred during year 2017.

On March 22, purchased 700 shares of RIP Company stock at $13 per share plus a(n) $320 brokerage fee. These shares are categorized as trading securities.

On September 1, received a $3 per share cash dividend on the RIP Company stock purchased in transaction a.

On October 8, sold 350 shares of RIP Co. stock for $23 per share, less a(n) $310 brokerage fee.

Explanation / Answer

22-Mar Short­term investments—Trading (RIP) 9420 =(700*13)+320              Cash 9420 1-Sep Cash 2100 =700*3             Dividend revenue 2100 8-Oct Cash 7740 =(350*23)-310          Short­term investments—Trading (RIP) 4710 =9420/700*350          Gain on sale of short­term investments 3030

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