In January 2010, Solitron, Inc., determined that it had excess cash on hand and decided to invest

Question:

In January 2010, Solitron, Inc., determined that it had excess cash on hand and decided to invest in Horner Company stock. Solitron intends to hold the stock for a period of three to five years, thereby making the investment an available-for-sale security. The following transactions took place in 2010, 2011, and 2012:

2010

Jan. 17 Purchased 2,750 shares of Horner stock for $89,500.

May 10 Received a cash dividend of $1.30 per share on Horner stock.

Dec. 31 The market value of the Horner stock was $30 per share.

2011

May 22 Purchased 750 shares of Horner stock at $40 per share.

July 18 Received a cash dividend of $0.90 per share on the Horner stock.

Dec. 31 The market value of the Horner stock was $42 per share.

2012

June 7 Received a cash dividend of $1 per share on the Horner stock.

Oct. 5 Sold the Horner stock at $27 per share for cash.

Dec.31 The market value of the Horner stock was $25 per share.

Prepare the journal entries required to record each of these events.

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...