On February 15,Jewel Company buys 7,000 shares of Marcelo Corp.common stock at $28.53 per share plus a brokerage fee of $400.The stock is classified as available-for-sale securities.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 less a brokerage fee of $250.The journal entry to record the sale of the 3,500 shares of stock on November 17 is:

Question

Quizplus · Accepted Answer

The cost of the 3,500 shares of Marcelo Corp. stock sold on November 17 is calculated as follows: 
- Total cost of 7,000 shares bought on February 15: 7,000 shares x $28.53 = $199,710 
- Add brokerage fee: $199,710 + $400 = $200,110 
- Cost per share: $200,110 / 7,000 shares = $28.59 
- Cost of 3,500 shares sold: 3,500 shares x $28.59 = $100,065

The proceeds from the sale of the 3,500 shares of Marcelo Corp. stock on November 17 is calculated as follows: 
- 3,500 shares x $29.30 = $102,550 
- Less brokerage fee: $102,550 - $250 = $102,300

To record the sale of the 3,500 shares of stock on November 17, the journal entry would be: 
- Debit Cash for $102,300 
- Credit Long-Term Investments-AFS for $100,055 ($100,065 cost - $1,010 amortization of unrealized gain) 
- Credit Gain on Sale of Long-Term Investments for $2,245 ($102,300 - $100,055 - $400 brokerage fee)

Therefore, the correct choice is D.

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