Task: Available-for-Sale Equity Securities
On January 2, 2007, Tomlin Company purchased 1,000 shares of Joel Company common stock for $35,000. The stock has a par value of $10 and is part of the total stock outstanding of 20,000 shares of Joel Company. Tomlin Company intends the stock to be available for sale. Total stockholders' equity of Joel Company on January 2, 2007 was $600,000.
Instructions:
Prepare necessary journal entries in accordance with generally accepted accounting principles on the books of Tomlin Company for the following transactions. If no entry is required, write "none" in the space provided. (Round all calculations to the nearest cent.)
(a) January 2, 2007: Tomlin purchases the shares described above.
(b) December 31, 2007: Tomlin receives an $.75 per share dividend from Joel, and Joel announces a net income for 2007 of $250,000.
(c) December 31, 2007: According to The Wall Street Journal, Joel common is selling for $30 per share. Tomlin's management views this decline as being only temporary in nature. Joel's common is Tomlin's only available-for-sale security.
(d) February 15, 2008: Tomlin sells 500 of the shares purchased on January 2, 2008 at $36 per share.