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21 September, 02:33

Prepare journal entries to record the following transactions involving the short-term securities investments of Duke Co., all of which occurred during year 2013.

a. On March 22, purchased 770 shares of RIP Company stock at $24 per share plus a $190 brokerage fee. These shares are categorized as trading securities

b. On September 1, received a $4 per share cash dividend on the RIP Company stock purchased in transaction a.

c. On October 8, sold 385 shares of RIP Co. stock for $34 per share, less a $180 brokerage fee.

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  1. 21 September, 02:40
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    The journal entries are shown below:

    On March 22

    Short term investment A/c Dr $18,670 (770 shares * $24 + $190)

    To Cash A/c $18,670

    (Being the short term investment is purchased for cash)

    On September 1

    Cash A/c Dr $3,080

    To Dividend A/c $3,080

    (Being cash is received in respect of dividend)

    On October 8

    Cash A/c Dr $12,910 (385 shares * $34 - $180)

    To Short term investment A/c $9,335 ($18,670 * 770 shares : 385 shares)

    To Gain on investment $3,575

    (Being short term investment is sold and the remaining amount is credited to the gain on investment account)
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