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These are journal entries of  2 years'  investments transactions. Rules of double entry system will apply on these investment transactions. See detail problem before getting its solution.

Solution

Journal Entries

Jan. 3,  2010

Shares Investments in Whalen Inc. Dr. 138000

Bank Account Cr. 138000

July 6, 2010

Now, when in 6 july 2010, shares' stock will be split 2 for every 1, it means number of shares will be double. So, dividend will increase as per this rule

3000 X 2 X 0.60 = \$ 3600

Bank Account Dr. 3600

Oct. 14, 2010

Sold 900 shares @ \$ 25 per share less brokerage commission \$ 50

If we want to calculate the profit on this sale, we have to calculate the real cost of these shares.

Cost of 900 shares

= 138000 X 900/ 6000 = \$ 20700

Net sale value of 900 shares = (900 X \$ 25 ) - \$50 = \$ 22450

Profit on sale of 900 shares = \$ 1750

Bank Account Dr. 22450

Share investment in Whalen Inc. Cr. 20700

Profit on Sale of Share Investment in Whalen Inc. Cr. 1750

Dec. 9, 2010

Balance shares in hand = 6000 -900 = 5100

Dividend = 0.60 x 5100 =\$ 3060

Bank Account Dr. 3060

Dec. 31, 2010

Fair Value of Per share after sale

= ( 138000 - 20700 )/ 5100 =  \$ 23 per share

New fair value = \$ 21

Unrealized loss due to changing  fair value

= \$ 23 -\$ 21 = \$ 2

5100 X 2 =  \$ 10200

Unrealized loss of shares investment in Whalen Inc. Dr. 10200

Valuation Allowance for Available-for-Sale Investment Cr. 10200

Jan. 5, 2011

Investments in Tasmania Co. Dr. 620000

Bank Account Cr. 620000

July 8, 2011

Balance shares in hand = 6000 -900 = 5100

Dividend = 0.70 x 5100 = \$ 3570

Bank Account Dr. 3570

Dividend Received from Whalen Inc.  Cr. 3570

Dec. 8, 2011

Balance shares in hand = 6000 -900 = 5100

Dividend = (0.70+ 0.15) x 5100 = \$ 4335

Bank Account Dr. 4335

Dividend Received from Whalen Inc.  Cr. 4335

Dec. 31, 2011

Bank Account Dr. 18,000
Investment in Tasmania Inc.  Cr.18,000

Dec. 31, 2011

.Fair value increased from \$ 21 per share to \$ 26 per share

Unrealized gain due to changing  fair value

= \$ 26 -\$ 21 = \$ 5

5100 X 5 =  \$ 25500

Valuation Allowance for Available-for-Sale Investment Dr. 25500

Unrealized Gain of shares investment in Whalen Inc. Cr. 25500

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