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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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York Corporation declares a property dividend, payable in bonds of Laurens Company, which are classified as “available for sale.” The bonds are recorded at a fair value of $58,000 (there is a $0 balance in Allowance for Change in the Value of Investment in Available-for-Sale Securities), but at the time of the property dividend have a current value of $67,000. Prepare the journal entries to record the declaration of this property dividend.

To determine

Prepare journal entry to record the given transaction.

Explanation

Dividends:

This is the amount of cash distributed to stockholders by a company out its earnings, according to their proportion of shares invested in the company.

DateAccount Titles and explanationDebit ($)Credit ($)
 Investment in available-for-sale securities     ($67,000$58,000)9,000 
      Gain on disposal of investments  9,000
 ( To record  investment made in the bonds by purchase of securities available in the Company  L)  

(Table 1)

  • Investment in available-for-sale securities is an asset and there is an increase in the value of an asset

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