Hardin Park Company had these transactions pertaining to stock investments Feb. 1 Purchased 2,500 shares of Raley Company (10%) for $44,500 cash.
June 1 Received cash dividends of $1 per share on Raley stock.
Oct) 1 Sold 1,000 shares of Raley stock for $19,500.
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 $17,800.
B) credit to Gain on Sale of Stock Investments for $680.
C) debit to Stock Investment for $17,800.
D) credit to Gain on Sale of Stock Investments of $1,700.

Question

Quizplus · Accepted Answer

The sale of 1,000 shares for $19,500 results in a gain. The cost of 1,000 shares is $17,800 (calculated as $44,500/2,500 shares * 1,000 shares). The gain is $1,700 ($19,500 - $17,800), so the correct entry includes a credit to Gain on Sale of Stock Investments for $1,700.

Hardin Park Company Had These Transactions Pertaining to Stock Investments