Morgan Company purchased 2,000 shares of Asta's common stock for $143,000 as a long-term investment and is considered available-for-sale.The par value of the stock was $1 per share.Morgan paid $375 in commissions on the transaction.The entry to record the transaction would include a:
A)Credit to Common Stock for $2,000.
B)Credit to Common Stock for $143,000.
C)Credit to Common Stock for $143,375.
D)Debit to Long-Term Investments for $143,000.
E)Debit to Long-Term Investments for $143,375.

Question

Quizplus · Accepted Answer

The total cost of the investment includes the purchase price and any additional costs such as commissions. Therefore, the Long-Term Investments account should be debited for the total amount of $143,375 ($143,000 purchase price + $375 commission).

Morgan Company Purchased 2,000 Shares of Asta's Common Stock for $143,000