Question

On May 15, 2018, Mayer Co. invests \(8,000 in John, Inc. stock. John pays Mayer a \)200 dividend on November 15, 2018. Mayer sells the John stock on December 10, 2018, for $7,500. Assume the Mayer Co. does not have significant influence over John, Inc. Journalize the 2018 transactions related to Mayer’s investment in John stock.

Short answer

Both sides of the journal total$16,200.

Step-by-step solution

Definition of Equity Investment

The investment done by purchasing the company’s equity shares is known as an equity investment. Equity investment might provide controlling interest or non-controlling interest.

Journal Entries for Recording the Investment in John Stock

Date	Accounts and Explanation	Debit $	Credit $
15 May 2018	Equity investment	$8,000
	Cash		$8,000
15 Nov 2018	Cash	$200
	Dividend revenue		$200
10 Dec 2018	Cash	$7,500
	Loss on disposal	$500
	Equity investment		$8,000
Total	$16,200	$16,200