advanced accounting

There are a few entries related to investments that would be required on PERT Company’s books for 2009. 1. Recognizing an Investment: If a company has invested money in another company or has purchased a security, an asset account must be set up to record the investment. To account for this, a debit to Investments and a credit to Cash (or Cash Equivalents or a similar account) must be made. 2. Recording Investment Income: Interest income from investments must be recorded when it is earned and not when it is received. To record this income, a debit should be made to interest income and a credit should be made to Investments. 3. Recording Dividends Received: When a company receives dividends on investments, a credit to Cash and a debit to Dividends Received must be recorded. 4. Recording the Sale of Investments: If a company sells an investment, a debit should be made to Cash and a credit should be made to Investments. The gain or loss on the investment must also be determined and adjusted through additional entries.