On September 12, 2,000 shares of Aspen Company are acquired at a price of $50 per share plus a $200 brokerage fee. On October 15, a $0.50 per-share dividend was received on the Aspen Company stock. On November 10, 1,200 shares of the Aspen Company stock were sold for $42 per share less a $150 brokerage fee. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method.
Answer:
Sept. 12 Investments—Aspen Company Stock* 100,200
Cash 100,200
*(2,000 shares × $50 per share) + $200
Oct. 15 Cash* 1,000
Dividend Revenue 1,000
*$0.50 per share × 2,000 shares
Nov. 10 Cash* 50,250
Loss on Sale of Investments 9,870
Investments—Aspen Company Stock** 60,120
*(1,200 shares × $42) – $150
**1,200 shares × ($100,200 ÷ 2,000 shares)
