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Chapter 10: 3TI (page 554)

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鈥檚 investment in John stock.

Short Answer

Expert verified

Both sides of the journal total$16,200.

Step by step solution

01

Definition of Equity Investment

The investment done by purchasing the company鈥檚 equity shares is known as an equity investment. Equity investment might provide controlling interest or non-controlling interest.

02

Journal Entries for Recording the Investment in John Stock

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

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