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1. On November 28, 20x7, Barrett Company purchased 20,000 shares of HAL Corporation common stock for...

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Accounting

1. On November 28, 20x7, Barrett Company purchased 20,000 sharesof HAL Corporation common stock for $360,000. Barrett's managementintends to hold the shares for a short period of time. On December31, 20x7, the price of HAL stock was $15 per share. Finally, onJanuary 19, 20x8, Barrett sells all 20,000 shares for $375,000.Prepare Barrett's journal entries for November 28, December 31, andJanuary 19.

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Journal entries  
Event Dr/Cr Particulars Debit $ Credit $
November 28 20x7 Debit Investment in HAL Corporation       360,000
Credit Cash/Bank       360,000
(To record the purchase of equity shares of HAL Corporation for short term purpose)
=20,000 shares at $ 18 per share
December 31, 20x7 Debit Unrealized loss on revaluation         60,000
Credit Investment in HAL Corporation         60,000
(To record the revaluation of short term investment at the end of reporting period which will go to the income statement)
Please note that short term investment gain or loss will go to income statement
January 19, 20x8 Debit Cash/Bank       375,000
Credit Gain on sale of investments         75,000
Credit Investment in HAL Corporation       300,000
(To record the sale of investment in HAL corporation and gain on sale of investment)

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