Hardin Park Company had these transactions pertaining to stock investments Feb. 1 Purchased 5,000 shares of Raley Company (10%) for $89,000 cash.
June 1 Received cash dividends of $1 per share on Raley stock.
Oct) 1 Sold 2,000 shares of Raley stock for $39,000.
Dec) 1 Received cash dividends of $2 per share on Raley stock.
The entry to record the sale of the stock would include a
A) debit to Cash for $35,600.
B) credit to Gain on Sale of Stock Investments for $1,360.
C) debit to Stock Investment for $35,600.
D) credit to Gain on Sale of Stock Investments of $3,400.

Question

Quizplus · Accepted Answer

The sale of 2,000 shares for $39,000 results in a gain. The cost of these shares is calculated as (2,000/5,000) * $89,000 = $35,600. The gain is $39,000 - $35,600 = $3,400, which is credited to Gain on Sale of Stock Investments.

Hardin Park Company Had These Transactions Pertaining to Stock Investments