Homework Assignment 4

McDaniel Corporation manufactures surveying equipment. Journalize the entries to record the following
selected equity investment transactions completed by McDaniel during 2013:
February 26
Purchased for cash 950 shares of Demon Inc. stock for $66 per share plus a $50 brokerage commission.
i
Dr. Investment - Demon Inc. $62,750
Cr. Cash $62,750

April 16
Received dividends of $0.35 per share on Demon Inc. stock
ii
Dr. Cash $332.5
Cr. Dividend Revenue $332.5

June 18
Purchased 450 shares of Demon Inc. stock for $65 per share plus a $45 brokerage fee
iii
Dr. Investment Demon Inc. $29,295
Cr. Cash $29,295

August 19
Sold 1,100 shares of Demon Inc. stock for $70 per share less a $180 brokerage commission. McDaniel as
sumes that the first investments purchased are the first investments sold.
iv
Dr. Proceed from sale $76,820
Cr. Gain on investment sold $4,499
Cr. Investment [sale of 1100 shares] $72,321



November 14
Received dividends of $0.45 per share on Devon Inc. stock
v
Dr. Cash $135
Cr. Dividend Revenue $135



Computations
i
[Shares purchased Share price] + Brokerage commission
[950$66] + $50 = $62750

ii
Dividend Received = $0.35950shares = $332.5

iii
New shares Purchased
[Shares purchased Share price] + Brokerage commission
[450$65] + $45 = $29295

iv
Proceed from shares sold = [1100$70]- $180 = $76,820
Book value of stock per share [$62750+$29295] = $92,045
[$92,0451400shares]1100shares = $72,321
Gain on sale of investment [$76,820=$72,321] = $4,499

v
Dividend Received on remaining stock of 300 shares
=300shares $0.45= $135