On September 15,Nolan Company purchases 2,000 shares of Francis Company common stock for $30,000,including $500 of commissions and brokerage fees.This is Nolan's first and only purchase of this type of investment.On November 1,Nolan sold 500 shares of the Francis Company stock for $8,200.On December 31,the fair value of Francis Company common stock was $16 per share.The journal entry to record the purchase on September 15 is:
A)Debit Stock Investments - Francis Company,$30,000; Credit Cash,$30,000.
B)Debit Stock Investments - Francis Company,$29,500; Credit Cash,$29,500.
C)Debit Trading Securities,$30,000; Credit Cash,$30,000.
D)Debit Investments - HTM,$30,000; Credit Cash,$30,000.
E)Debit Cash,$30,000; Credit Stock Investments - Francis Company,$30,000.

Question

Quizplus · Accepted Answer

The correct journal entry to record the purchase of stock includes debiting the investment account (Stock Investments - Francis Company) for the total cost of the purchase ($30,000, including commissions and brokerage fees) and crediting cash for the same amount. This reflects the outflow of cash to acquire the investment.

On September 15,Nolan Company Purchases 2,000 Shares of Francis Company