Refer to the transactions in ED4, but now assume the 1,000 shares are sold on February 1,

Question:

Refer to the transactions in ED–4, but now assume the 1,000 shares are sold on February 1, 2022, for $80 per share.

Required:

1. Record each of these transactions in 2021, including an adjustment on December 31 for the investment’s fair value, if appropriate.

2. Record the sale on February 1, 2022.

ED–4

Gator Shoes, Inc., manufactures a line of stylish waterproof footwear. The following transactions relate to investments in common stock during 2021. March 1 Purchases 3,000 shares (10%) of Power Drive Corporation’s common stock for $62 per share.

July 1 Receives a cash dividend of $1.25 per share.

December 31 The fair value of Power Drive Corporation’s common stock is $75 per share.

On February 1, 2022, Gator Shoes sells 1,000 shares of Power Drive Corporation’s common stock for $70 per share.

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...

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