Question

Gaines Corporation invested $126,000 to acquire 26 comma 000 shares of Owens​ Technologies, Inc. on March​ 1, 2018. On July​ 2, 2019, Owens pays a cash dividend of $ 3.25 per share. The investment is classified as equity securities with no significant influence. Which of the following is the correct journal entry to record the transaction on July​ 2, 2019?

a. Cash 78,000
Equity Investments 78,000

b. Cash 78,000
Retained Equipment 78,000

c. Equity Investments 78,000
Cash 78,000

d. Cash 78,000
Dividend Revune 78,000

Answer 1

Cash Dr, $84,500

Dividend revenue $84,500

Explanation:

The Journal entry is shown below:-

Cash Dr, $84,500 (26,000 × $3.25)

To Dividend revenue $84,500

(Being dividend is recorded)

To record the dividend, we debited the cash as it increased the assets and we credited the dividend revenue as it also increased the revenue

Therefore the above entry is the right and the same is not given in the option.