Question

Brooks Flooring is a national supplier of all types of flooring. Their biggest customer is Jenkins Construction Company. On July 8, 2016, Brooks Flooring purchased 100 shares of Jenkins stock. Later that year, on November 14, 2016, Brooks decided to sell 1,000 shares of Brooks stock to investors. What is the difference between these two transactions involving stock?

Answer 1

The two transactions involving stock are the purchase of Jenkins stock and the sale of Brooks stock to investors.

Step-by-step explanation:

The two transactions involving stock by Brooks Flooring are the purchase of 100 shares of Jenkins stock and the sale of 1,000 shares of Brooks stock.

The purchase of Jenkins stock means that Brooks Flooring became a shareholder of Jenkins Construction Company. They now have partial ownership of Jenkins and can receive dividends and participate in voting rights. On the other hand, the sale of Brooks stock to investors means that Brooks Flooring is selling a portion of their ownership in the company to outside investors.

So, the difference between these two transactions is the direction of ownership change. In the purchase of Jenkins stock, Brooks Flooring becomes a shareholder of another company, while in the sale of Brooks stock, Brooks Flooring is selling their own shares to outside investors.

Answer 2

The difference in these two transaction is that first is investing activity while the later is financing activity.

Step-by-step explanation:

The first activity is purchasing 100 shares of Jenkins stock.

The purchasing of stocks are included in the investing activities.

The second activity is selling of the stocks, this is included in the financing activity

The financing activities are transactions with the investors which affects the equity

Hence,

The difference in these two transactions is that first is investing activity while the later is a financing activity.