Haladam Company Had the Following Transactions Relating to Investments in Trading

question 136

Essay

Haladam Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.
$\begin{array}{cl}\text{May 4} & \text{Haladam purchased 600 shares of Cob Company stock at \$ 120 per share plus a \$ 750}\\&\text{brokerage fee.}\\\text{July 1}& \text{Haladam received a \$ 2.50 per share cash dividend on the Cob Company stock.}\\\text{Sept. 15} &\text{Sold 300 shares of the Cob Company stock for \$ 125 per share, less a \$ 450}\\ &\text{brokerage fee.}\\\text{Dec. 31}& \text{The market value of the Cob Company stock (the only investment that Haladam}\\&\text{owns) is \$124 per share. The balance of the Market Adjustment - Trading a zero}\\ &\text{balance prior to adjustment.}\end{array}$

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Definitions:

Tax Shield

The decrease in income tax liability achieved by subtracting permissible deductions like mortgage interest or depreciation from one's taxable income.

Capital Structure

The assortment of loans and equity a firm leverages to finance its daily workings and growth aspirations.

Legal Obligation

A duty enforced by law that requires an entity or individual to perform or refrain from certain actions.

Protective Covenants

Provisions or clauses in a debt agreement that limit certain actions of the borrower to protect the lenders' interests.