On February 12, Addison, Inc. purchased 6,000 shares of Lucas Company at $22 per share plus a $240 brokerage fee. This purchase represents less than 20% ownership of the Lucas Company. On August 22, Lucas paid a $0.42 dividend per share. On November 10, 4,000 shares of Lucas stock were sold for $28 per share less a $160 brokerage fee.
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Prepare the journal entries for the original purchase, dividend, and sale under the fair value method.
What will be an ideal response?
| Feb. | 12 | Investments-Lucas Company Stock | 132,240* | |
| Cash | 132,240 | |||
| *(6,000 shares × $22 per share) + $240 | ||||
| Aug. | 22 | Cash | 2,520* | |
| Dividend Revenue | 2,520 | |||
| *$0.42 per share × 6,000 shares | ||||
| Nov. | 10 | Cash | 111,840* | |
| Gain on Sale of Investments | 23,680 | |||
| Investments-Lucas Company Stock | ?88,160** | |||
| *(4,000 shares × $28) - $160 | ||||
| **4,000 shares × $132,240/6,000 shares | ||||
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