Asked by Baylee Johnson on Jun 07, 2024
Verified
Blaine Company had these transactions pertaining to stock investments: Feb. 1 Purchased 2000 shares of Horton Company (10%) for $51000 cash.
June 1 Received cash dividends of $2 per share on Horton stock.
Oct.1 Sold 1200 shares of Horton stock for $32400.
The entry to record the purchase of the Horton stock would include a
A) debit to Stock Investments for $45900.
B) credit to Cash for $45900.
C) debit to Stock Investments for $51000.
D) debit to Investment Expense for $5100.
Stock Investments
Purchases of shares in other companies, intended as a long-term investment or to exert control or influence over those companies.
Cash
Money in the form of coins or banknotes, especially that held by an organization or in bank accounts.
- Comprehend the accounting practices for managing stock investments, with an emphasis on dividends and the sales process.
Verified Answer
KR
Kathleen RideoutJun 12, 2024
Final Answer :
C
Explanation :
When purchasing stock, the account to be debited is Stock Investments for the amount paid, which in this case is $51,000. Cash would be credited for the same amount.
Learning Objectives
- Comprehend the accounting practices for managing stock investments, with an emphasis on dividends and the sales process.
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