Question

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.

Answer 1

Step-by-step 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