Purchased 3300 shares of Escalante Corporation common stock

Purchased 3,300 shares of Escalante Corporation common stock (4%) for $200,640 cash. Recelved a cash dividend of $3 per share. Sold 660 shares of Escalante Corporation common stock for $42,240 cash. Received a cash dividend of $3 per share. Jan. July 1 1 Dec. 1 Dec. 31 Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select \"No entry\" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit

Solution

Calculation of gain of sale of investments :

Purchase price of one share = 200640/3300 = 60.8

Sale of price of each share = 42240 /660 = 64

Difference between sale and purchase price = 64-60.8 = 3.2

Gain on sale of 660 shares = 3.2 * 660 shares = 2112

Date	Journal Entry	Debit	Credit
Jan-01	Stock Investments	200640
	To Cash		200640
	(Purchase of 3300 shares for cash at $200,640)
Jul-01	Cash	9900
	To Dividend Revenue		9900
	(Cash dividend of $3 received per share)
Dec-01	Cash	42240
	To Stock Investments		40128
	To Gain on sale of Stock Investments		2112
	(Sale of 660 shares for 42240 )
Dec-31	Cash	7920
	To Dividend Revenue		7920
	(Dividend received on 2640 [3300-660] shares)