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On August 15, 1,600 shares of Birch Company are acquired at a price of $44 per share plus a $160 brokerage fee
On August 15, 1,600 shares of Birch Company are acquired at a price of $44 per share plus a $160 brokerage fee. On September 10, a $0.75-per-share dividend was received on the Birch Company stock. On October 5, 500 shares of the Birch Company stock were sold for $35 per share less a $50 brokerage fee. Prepare the journal entries for the original purchase, dividend, and sale.
Expert Solution
Aug. 15 Investments-Birch Company Stock................. 70,560*
Cash........................................................................... 70,560
*(1,600 shares × $44 per share) + $160
Sept. 10 Cash...................................................................... 1,200*
Dividend Revenue..................................................... 1,200
*$0.75 per share × 1,600 shares
Oct. 5 Cash.................................................................... 17,450*
Loss on Sale of Investments................................... 4,600
Investments-Birch Company Stock........................ 22,050**
*(500 shares × $35) - $50
**500 shares × ($70,560/1,600 shares)
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