Oct. 1, 2019, Maurice, Co. purchased 1,000 shares of Olive Co @$5.

Olive has 10,000

outstanding shares. Maurice paid broker’s fee 2%.
Nov.25, 2019, Olive paid cash dividend total $800.
Dec. 1, 2019, 400 shares was sold @$5.80. Broker’s fee 2%
Dec 31, 2019 (Ending accounting period), Olive’s share traded @6.
Feb 10, 2020, Maurice sold all of its investment in Olive’s share @5.70. Broker’s fee 2%.

Prepare Journal entries using following assumptions;

1. The securities are classified as Trading Securities.
2. The securities are classified as Available for Sale Securities and choose to apply the
option to use Other Comprehensive income

Answer:
Purchased
Brokers' fee
Cash paid

Journal

Oct, 1 2019

Trading Securities

Investment in share
Brokers' expense

Nov, 25 2019

Cash

Dec, 1 2019

Shares are sold

Brokers' fee
Cash Paid

Cash
Loss on sale of Investment

Dec, 31 2019

TRADING
Share owned left
FV
Total FV

Carrying amount
Difference

Cash

Feb, 10 2020

Share
Brokers' fee
Cash Received

Carrying amount
Difference

Cash
Loss on sale of investment
 5000
100
5100

Maurice, Co. purchased 1,000

shares of Olive Co @$5. Olive
has 10,000 outstanding shares.
Maurice paid broker’s fee 2%.

5000
100
Cash 5100

Olive paid cash dividend total

$800.

800
Dividend Revenue 800

400 shares was sold @$5.80.

Broker’s fee 2%

2320
46
2366

2366
le of Investment 4009
Stock Investment 6375

(Ending accounting period),

Olive’s share traded @6.

The shares on the previous is 1000 shares, meanwhile sold by 400 shares. So the shares left are 600

600
6
3600

5000
-1400

1400
Investment in share 1400

Maurice sold all of its

investment in Olive’s share
@5.70. Broker’s fee 2%.

3420
68
3352

3600
-248

3352
le of investment 248
Investment in share 3600