Investment in Stock On October 1, 2008, Chicago Corp. purchases 1,000 shares of the preferred…

Investment in Stock

On October 1, 2008, Chicago Corp. purchases 1,000 shares of the preferred stock of Denver Corp.

for $40 per share. Chicago pays another $1,000 in commissions. On October 20, 2008, Denver

declares and pays a dividend of $1 per share. Chicago sells the stock on November 5, 2008, at a

price of $45 per share.

Required

Prepare all necessary journal entries on Chicago’s books in connection with its investment, beginning

with the purchase of the preferred stock on October 1, 2008; the dividend received on

October 20, 2008; and the sale on November 5, 2008.