Question

Entries for equity investments: less than 20% ownership Quan Corp. manufactures construction equipment. Journalize the entries to record the following selected equity investment transactions completed by Quan during a recent year using the fair value method. Feb. 2 Mar. 6 Purchased for cash 3,100 shares of Celeste Inc.'s common stock for $32 per share plus a $124 brokerage commission. Celeste Inc. has 80,000 shares of common stock outstanding. Received dividends of $0.45 per share on Celeste Inc. stock. Purchased 1,400 shares of Celeste Inc. stock for $38 per share plus a $56 brokerage commission. Sold 4,000 shares of Celeste Inc. stock for $41 per share less a $100 brokerage commission. Quan assumes that the first investments purchased are the first investments sold. June 7 July 26 Sept. 25 Received dividends of $0.62 per share on Celeste Inc. stock. At the end of the accounting period, the fair value of the remaining 500 shares of Celeste Inc. stock was $20,720. Dec. 31

Answer 1

Accounting title for July 26 should be Gain on sale of investments only, or it can be Gain on Sale of Equity Investments.
I dont have the options of the titles, so i would have suggested other title given the options.

Amount for Dec 31
Cost of 500 shares remaining = $53256 / 1400 x 500 = $19020

Unrealized Gain = $20720-19020 = $1700

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