Answer:
Journal entries needed for:
a. Purchase of stock
b. Share of Aloof income
c. Dividend
d. Sale of Aloof company stock
a. Purchase of stock
Date Account Title Debit Credit
Jan 2, 20Y4 Investment in Aloof company $340,000
stock
Cash $340,000
b. Share of Aloof income
Date Account Title Debit Credit
Dec 31, 2024 Investment in Aloof company $72,000
stock
Income of Aloof Company $72,000
<u>Working:</u>
= 40% * 180,000 income
= $72,000
c. Dividend
Date Account Title Debit Credit
Dec 31, 2024 Cash $4,000
Investment in Aloof company $4,000
stock
<u>Working:</u>
= 40% * 10,000 dividend
= $4,000
d. Sale of stock
Date Account Title Debit Credit
Dec 31, 2024 Cash $405,000
Loss on sales of Aloof $3,000
company stock
Investment in Aloof company $408,000
stock
<u>Working:</u>
Value of stock = Purchase price + share of Aloof income - Share of dividend
= 340,000 + 72,000 - 4,000
= $408,000
