Question

Cole Inc. owns shares of Marlin Corporation stock. At December 31, 2017, the securities were carried in Cole’s accounting records at their cost of $875,000, which equals their fair value. On September 21, 2018, when the fair value of the securities was $1,200,000, Cole declared a property dividend whereby the Marlin securities are to be distributed on October 23, 2018, to stockholders of record on October 8, 2018. Prepare all journal entries necessary on those three dates.

Answer 1

Answer
Date	Account titles ad explanation	Debit	Credit
December 31, 2017	No Entry ..
September 21,2018	Equity investments	$   325,000.00		(1200000-875000)
	To Unrealized gain or loss		$   325,000.00
	(To record gain or loss)
September 21,2018	Retained earnings	$1,200,000.00
	To Property dividends payable		$1,200,000.00
	(To Record Property Dividend)
October 23, 2018	Property dividends payable	$1,200,000.00
	To Equity investments in Marlin Corporation		$1,200,000.00
	( To record the Property dividends payable )