Question

Sage Inc. owns shares of Pronghorn Corporation stock. At December 31, 2020, the securities were carried in Sage’s accounting records at their cost of $1,030,000, which equals their fair value. On September 21, 2021, when the fair value of the securities was $1,397,000, Sage declared a property dividend whereby the Pronghorn securities are to be distributed on October 23, 2021, to stockholders of record on October 8, 2021.
Prepare all journal entries necessary on those three dates.

Answer 1

Answer:

The Journal entry was recorded for Sage Inc, in the explanation section below

Explanation:

Journal Entries

Date                     Account Title and                  Debit $         Credit $

                                  Explanation

21st Sept-21            Equity Investments

                          ( $1,397,000-  $1,030,000,)      $367,000

                           To unrealized holding gain

                                       or loss                                                  $367,000

21st Sept-21         The retained earnings            $1,397,000

                      To Property Dividends payable                          $1,397,000

08- Oct-21                       No entry

23- Oct-21             Property Dividends payable  $1,397,000

                           To Equity Investments                                    $1,397,000