Nagen Company had these transactions pertaining to share investments: Feb. 1 Purchased 2,000 shares of Horton Company (10%) for ₤34,000 cash.
June 1 Received cash dividends of ₤2 per share on Horton shares.
Oct) 1 Sold 800 Horton shares for ₤15,600.
The entry to record the purchase of the Horton shares would include a

Question

Quizplus · Accepted Answer

When purchasing shares of another company, the initial entry is recorded as a debit to Share Investments to represent the asset acquired, and a credit to Cash for the amount paid. Therefore, the correct entry for the purchase of Horton Company shares would be a debit to Share Investments for ₤34,000 and a credit to Cash for ₤34,000. Choice (C) is the only option that correctly includes a debit to Share Investments for the amount of the purchase.

Nagen Company Had These Transactions Pertaining to Share Investments: Feb