5. Equity Securities with Significant Influence

Entry to record purchase of stock (Equity Securities with Significant Influence)

Debit Long term investments for full price of the stocks, Credit Cash for same amount.

Entry for investor when cash dividends are declared on common stock (Equity Securities with Significant Influence)

Debit Cash for amount of cash dividend (Cash dividend amount x % of stock owned), Credit Long term Investments for same amount

Entry to adjust for net income (Equity Securities with Significant Influence)

Debit Long term investments for amount of net income (Amount of net income for the year x % owned in stocks), Credit Investment Revenue for the same amount.

When stocks increase or decrease in value there is long no effect and no journal entries for Equity Securities with Significant Influence.

Selling stock at a loss (Equity Securities with Significant Influence)

Debit Cash for amount stock sold for, Debit Loss on Sale of Investments for selling price below account balance of long term investments, Credit Long term investments for account balance.

Selling stock at a gain (Equity Securities with Significant Influence)

Debit Cash for amount sold for, Credit Long term investments for balance, Credit Gain on sale of Investments for amount sold for - balance of long term investments.