Question

Nasu Corporation purchased 1,000 shares of Messi common stock ($50 par) at $180 per share as a short-term investment. The shares were subsequently sold at $188 per share. The cost of the securities purchased and gain or loss on the sale were Cost Gain or Loss $150,000 $2,000 gain $180,000 $8,000 gain $188,000 $8,000 gain $180,000 $2,000 loss

Answer 1

Solution:

The cost of securities purchased = Total number of shares purchased X Purchase price per share

= 1000 shares X 180

= $ 180000

Gain / (loss) on the sale of shares = Sales value of 1000 shares - Cost of securities

= (188 * 1000) - 180000

= 188000 - 180000

= $ 8000

Therefore, gain on sale of securities in $ 8000

Therefore, the correct answer is option C i.e. Cost = $180000 and Gains = $8000