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During 2017, jackson company purchased 17,000 shares of monticello corp. Common stock for $382,500 as a passive interest investment. The fair value of these shares was $373,150 at december 31, 2017. Jackson sold all of the monticello stock for $27.25 per share on july 3, 2018, incurring $15,000 in brokerage commissions. Jackson company should report a realized gain on the sale of stock in 2018 of:_________.
A. $65,750.
B. $75,100.
C. $80,750.D. $90,100.

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Answer:

Explanation:

Other comprehensive income for 2017

The fair value of these shares - Common stock

=  $373,150 -  $382,500

= -$9,350

Jackson sold all of the monticello stock for $27.25 per share:

$27.25*17,000 = $463,250

Commission : ($15,000)

Net proceeds: $448,250

Acquisition     ($382,500 )

Gain on sale    $65,750

The joural entry is:

Cash                  $448,250

  • OTI (loss)                    $9,350
  • Holmes shares         $373,150
  • Gain on sale             $65,750

               

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