Bellows Inc. purchased 10,000 shares of Nesbitt Inc.’s common stock for $7.50 per share. Nesbitt Inc. has 100,000 shares of common stock outstanding.
a. What account and amount is debited by Bellows Inc. to record the investment in Nesbitt Inc.?
b. Assuming that Nesbitt Inc. paid a dividend of $0.40 per share, what account and amount is credited by Bellows Inc. to record the receipt of the dividend?
c. If Bellows Inc. sold 4,000 shares of Nesbitt Inc.’s common stock for $9.00 per share, how much gain on the investment would Bellows Inc. recognize?