Investment in Stock On October 1, 2010, Chicago Corp. purchases 1,000 shares of the preferred stock of

Question:

Investment in Stock On October 1, 2010, Chicago Corp. purchases 1,000 shares of the preferred stock of Denver Corp. for $40 per share. Chicago pays another $1,000 in commissions. On October 20, 2010, Denver declares and pays a dividend of $1 per share. Chicago sells the stock on November 5, 2010, at a price of $45 per share.

Required

Identify and analyze all transactions on Chicago’s books in connection with its investment, beginning with the purchase of the preferred stock on October 1, 2010; the dividend received on October 20, 2010; and the sale on November 5, 2010.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...