On January 4,2007 Larsen Company purchased 5,000 shares of Warner Company for $5

Question

On January 4,2007 Larsen Company purchased 5,000 shares of Warner Company for $59,500 plus a broker's fee of $1,000. Warner Company has a total of 25,000 shares of common stock outstanding and it is presumed the Larsen Company will have a significant influence over Warner. During each of the next two years, Warner declared and paid cash dividends of $0.85 per share, and its net income was $72,000 and $67,000 for 2007 and 2008, respectively. The January 12, 2009, entry to record the sale of 3,000 shares of Warner Company stock for $39,000 cash should be:

A)
Cash 39,000
Loss on Sale of Investments 8,200
Long-Term Investments 47,280
B)
Cash 39,000
Loss on Sale of Investments 8,880
Long-Term Investments 47,880
C)
Cash 39,000
Loss on Sale of Investments 2700

Long-Term Investments 36300

D)
Cash 39,000
Gain on Sale of Investments 8,750
Long–Term Investments 30,250
E)
Cash 39,000
Loss on Sale of Investments 21,500
Long–Term Investments 60,500


I come up with the answer C.I Do Not Know If It Is Correct Or Not. I Took 59500+1000 And Divided It By The 5000 Shares To See How Much It Was Sold For. I Got 12.1 And I Took That And Multiplied It By The 3000 Sold And Got 36300.

Explanation / Answer

ANSWER

B)
Cash 39,000
Loss on Sale of Investments 8,880
Long-Term Investments 47,880

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