Share
Explore BrainMass

Chicago Corp.

On October 1, 2008, Chicago Corp. purchases 1,000 shares of the preferred stock of Denver Corp. for $40 per share. In addition, Chicago pays another $1,000 in commissions. On October 20, 2008, Denver delivers and pays a dividend of $1 per share. Chicago sells the stock on November 5, 2008, at a price of $45 per share.

Required

Prepare all necessary journal entries on Chicago's books in connection with its investment, beginning with the purchase of the preferred stock on October 1, 2008; the dividend received on October 20, 2008, and the sale on November 5, 2008.

Solution Preview

On October 1, 2008, Chicago Corp. purchases 1,000 shares of the preferred stock of Denver Corp. for $40 per share. In addition, Chicago pays another $1,000 in commissions. On October 20, 2008, Denver delivers and pays a dividend of $1 per share. Chicago sells the stock on ...

Solution Summary

This solution is comprised of a detailed explanation to prepare all necessary journal entries on Chicago's books in connection with its investment, beginning with the purchase of the preferred stock on October 1, 2008; the dividend received on October 20, 2008, and the sale on November 5, 2008.

$2.19