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Question
On January 1, 2014, Rickson Corporation purchased 7,500 shares of AutoTech as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of AutoTech. Prepare the journal entries for Rickson to record the following transactions and events:
December 31, 2014: AutoTech reported net income of $66,000 for 2014.
February 1, 2015: Sold 1,875 of the AutoTech shares for $34 per share. In addition, $1,350 in fees and commissions were paid by Rickson on this sale. November 1, 2015: Rickson received a $0.90 per share cash dividend from AutoTech. December 31, 2015: AutoTech reported net loss of $46,000 for 2015.
Answer
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