Homework answers / question archive / Perry Investments bought 2,000 shares of Able, Inc

Perry Investments bought 2,000 shares of Able, Inc

Accounting

Share With

Perry Investments bought 2,000 shares of Able, Inc. common stock on January 1, 2015, for $20,000
and 2,000 shares of Baker, Inc. common stock on July 1, 2015 for $24,000. Baker paid $2,400 of
previously declared dividends to Perry on December 31, 2015. At the end of 2015, the market value of
the Able stock was $18,000 and the market value of

the Baker stock was $28,000. The stocks were purchased for short-term speculation. Perry owns 10% of
each company.

Perry should record the receipt of the Baker dividend as:

A.

DR Cash 240

CR Dividend income 240