This means each share is sold for 59,392/928 = $64/share
We therefore debit cash less the broker expense, and credit stock investment for the original price times shares sold less brokers' expense and gain on stock investments:
Cash = 59392 - 765 = 58627
Brokers' Expense = 765
Stock Investment = 928*56 - 765 = 51203
Gain = (64 - 56)*928 = 7424
Originally, when buying the stock, we debited stock investments for the cash paid plus brokers' fees, so when selling, we incur more brokers' fees, and subtracting these from the stock investments account achieves the desired effect of recognizing an expense.
Thus, the entry is:
12/1
Dr. Cash 58627
Cr. Stock Investments 51203
Cr. Gain on Sale of Stock 7424
Don't know why. Try Dr. Cash for total proceeds w/o brokerage fees (59392), cr. Stock investments for 51968, and credit gain for 7424. Maybe it's taking care of brokerage fees in another entry ( Dr. Brokerage expense Cr. Cash for 765)
Spring Inc. had the following transactions pertaining to investments in common stock.
Jan. 1 Purchased 4,640 shares of Angeltide Corporation common stock (6%) for $259,840 cash plus $2,700 broker’s commission.
July 1 Received a cash dividend of $4 per share.
Dec. 1 Sold 928 shares of Angeltide Corporation common stock for $59,392 cash, less $765 broker’s commission.
Dec. 31 Received a cash dividend of $4 per share.
i need help on dec 1 with cash, stocks investment and Gain on Sale of Stock Investments. i know that cash is 58627. please show work. thanks
