In an IPO on May 1,2009,Timmy Hilfigure purchased 1,000 shares of Abner Crummie,Inc.for $5,000.On April 30,2015,Timmy Hilfigure sold the 1,000 shares for $8,000 to Ralph Loring.What is the effect of the sale on April 30,2015?

Question

Quizplus · Accepted Answer

The sale of shares by Timmy Hilfigure to Ralph Loring does not directly affect Abner Crummie, Inc. as the transaction occurred between two outside parties. Abner Crummie, Inc. received the initial investment of $5,000 from Timmy during the IPO and would not be involved in any subsequent transactions between shareholders. Therefore, the company would not record any gain, loss, or change in cash for this particular transaction.

In an IPO on May 1,2009,Timmy Hilfigure Purchased 1,000 Shares