Answer:
Given that,
Shares sold = 10,000
Selling price = $27.50 per share
Brokerage commissions = $1,800
Securities originally cost = $261,000
Gain on sale of investments:
= Sales revenue - Brokerage commissions - Securities originally cost
= (10,000 × $27.50) - $1,800 - $261,000
= $275,000 - $1,800 - $261,000
= $12,200
Therefore, the Journal entry is as follows:
Cash A/c Dr. $273,200
To equity investments A/c $261,000
To Gain on sale of investments A/c $12,200
(To record the sale of securities)
