Question

On January 23, 16,000 shares of Tolle Company are acquired at a price of $24 per share plus a $160 brokerage commission. On April 12, a $0.40-per-share dividend was received on the Tolle Company stock. On June 10, 6,400 shares of the Tolle Company stock were sold for $32 per share less a $100 brokerage commission. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar. CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 121 Allowance for Doubtful Accounts 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 161 Investments-Tolle Company Stock 165 Valuation Allowance for Trading Investments 166 Valuation Allowance for Available-for-Sale Investments 181 Land 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 231 Interest Payable 241 Salaries Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Treasury Stock 332 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 350 Unrealized Gain (Loss) on Available-for-Sale Investments 351 Cash Dividends 352 Stock Dividends 390 Income Summary REVENUE 410 Sales 611 Interest Revenue 612 Dividend Revenue 621 Income of Tolle Company 631 Gain on Sale of Investments 641 Unrealized Gain on Trading Investments EXPENSES 511 Cost of Merchandise Sold 512 Bad Debt Expense 516 Cash Short and Over 520 Salaries Expense 531 Advertising Expense 534 Selling Expenses 535 Rent Expense 537 Office Supplies Expense 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense 721 Loss of Tolle Company 731 Loss on Sale of Investments 741 Unrealized Loss on Trading Investments Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar.

Answer 1

Date	Account Titles							Debit	Credit
Jan-23	Investments - Tolle Company Stock							384,160
	($24*16000+$160)
		Cash							384,160
	(Being Purchased shares of Tolle Company)
Apr-12	Cash	(16000*$0.40)						6,400
		Dividend Revenue							6,400
	(Being Dividend received on shares of Tolle Company)
Jun-10	Cash	(6400*$32-100)						204,700
		Investments - Tolle Company Stock (384,160/16000*6400)							153,664
		Gain on Sale of Investments							51,036
	(Being sold 6400 shares of Tolle Company)