On February 15,Jewel Company buys 7,000 shares of Marcelo Corp.common stock at $28.53 per share.The stock is classified as a stock investment with insignificant influence.This is the company's first and only stock investment.On March 15,Marcelo Corp.declares a dividend of $1.15 per share payable to stockholders of record on April 15.Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp.stock on November 17 of the current year for $29.30 per share.The journal entry to record the sale of the 3,500 shares of stock on November 17 is:

Question

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The journal entry to record the sale of the 3,500 shares of stock on November 17 should debit Cash for the amount received ($102,550). It should credit Stock Investments for the carrying amount of the shares sold ($99,855), which is the cost of the shares ($28.53) multiplied by the number of shares sold (3,500). It should also credit Gain on Sale of Stock Investments for the difference between the cash received and the carrying amount of the shares sold ($2,695). Since the stock is classified as a stock investment with insignificant influence, it should be accounted for as a stock investment at cost. Therefore, neither Long-Term Investments-Trading nor Long-Term Investments-AFS should be used in the journal entry. Loss on Sale of Stock Investments should not be used because the sale resulted in a gain.

On February 15,Jewel Company Buys 7,000 Shares of Marcelo Corp