On February 15, Jewel Company buys 8,400 shares of Marcelo Corp. common stock at $29.23 per share. The stock is classified as a stock investment with insignificant influence. This is the company’s first and only stock investment. On March 15, Marcelo Corp. declares a dividend of $1.50 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $30.00 per share. The journal entry to record the sale of the 4,200 shares of stock on November 17 is:
Multiple Choice
Debit Cash $126,000; credit Long-Term Investments—Trading $122,766; debit Gain on Sale of Long-Term Investments $3,234.
Debit Cash $126,000; credit Long-Term Investments—AFS $122,766; credit Gain on Sale of Long-Term Investments $3,234.
Debit Cash $126,000; credit Long-Term Investments—Trading $122,766; credit Gain on Sale of Long-Term Investments $3,234.
Debit Cash $126,000; credit Stock Investments $122,766; credit Gain on Sale of Stock Investments $3,234.
Debit Cash $122,766; debit Loss on Sale of Stock Investments $3,234; credit Stock Investments $126,000.
The correct answer is option 4 | ||||||
Dr/Cr | Particulars | Debit $ | Credit $ | |||
Debit | Cash | 126,000 | ||||
Credit | Stock investment | 122,766 | ||||
Credit | Gain on sale of stock investment | 3,234 | ||||
Particulars | Amount $ | |||||
No of stock purchase | 8,400 | |||||
Cost per stock | 29.23 | |||||
Total value of purchase (A) | 245,532 | |||||
Particulars | Amount $ | |||||
No of stock sold | 4,200 | |||||
Sale price per stock | 30 | |||||
Total sale price (B) | 126,000 | |||||
Particulars | Amount $ | |||||
No of stock sold | 4,200 | |||||
Cost per stock | 29.23 | |||||
Total cost of purchase(C) | 122,766 | |||||
Gain on sale of stock investment (B-C) | 3,234 | |||||
Note:- The dividend received would be credited to income statement as dividend income | ||||||
On February 15, Jewel Company buys 8,400 shares of Marcelo Corp. common stock at $29.23 per...
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