3TI
Question
On May 15, 2018, Mayer Co. invests \(8,000 in John, Inc. stock. John pays Mayer a \)200 dividend on November 15, 2018. Mayer sells the John stock on December 10, 2018, for $7,500. Assume the Mayer Co. does not have significant influence over John, Inc. Journalize the 2018 transactions related to Mayer’s investment in John stock.
Step-by-Step Solution
VerifiedBoth sides of the journal total $16,200.
The investment done by purchasing the company’s equity shares is known as an equity investment. Equity investment might provide controlling interest or non-controlling interest.
Date | Accounts and Explanation | Debit $ | Credit $ |
15 May 2018 | Equity investment | $8,000 |
|
| Cash |
| $8,000 |
|
|
|
|
15 Nov 2018 | Cash | $200 |
|
| Dividend revenue |
| $200 |
|
|
|
|
10 Dec 2018 | Cash | $7,500 |
|
| Loss on disposal | $500 |
|
| Equity investment |
| $8,000 |
Total | $16,200 | $16,200 |