Question

In 2016, Whiteside Catering purchased 60,000 shares of Roush Organic Foods’ common stock for $945,000. On December 31, 2016, the fair value of the Roush shares was $900,000. On December 3, 2017, Whiteside sold all of their shares of Roush common stock for $17 per share less $42,000 in brokerage commissions. The realized gain on the sale of stock in 2017 that Whiteside should report is

Answer 1

The realized gain that Whiteside should report on sale of stock should be $33,000.

Step-by-step explanation:

Whiteside bought the 60,000 shares from Roush organic foods at a price of $945,000 in 2016. On December 3, 2017 whiteside sold those 60,000 shares at $17 per share, with this they have also paid $42,000 in brokerage commissions. For taking out the gain we will subtract the purchase price of shares from selling price of share.

NOTE* ( We will subtract the brokerage commission from the sales. )

Realized gain = (Sales - brokerage commission) - purchase price

NOTE* (SALES = $17 X 60,000 = $1020,000)

= ($1020,000 - $42,000) - $945,000

= $978,000 - $945,000

= $33,000