29. On August 1, Masters Company buys 2,000 shares of ABD common stock for $72,5

Question

29. On August 1, Masters Company buys 2,000 shares of ABD common stock for $72,500 cash. On December 1, the stock investments are sold for $75,000 in cash. Which of the following record for the purchase and sale of the common stock? a. Aug. 1 Cash.. are the correct journal entries to 72,500 Stock Investments 72,500 Dec. 1 Cash..75,000 Stock Investments Gain on Sale of Stock Investments 72,500 2,500 b. Aug. 1 Stock Investment... ..72,500 Cash.. 72,500 72,500 2,500 Gain on Sale of Stock Investments c. Aug. 1 Stock Investments72,500 Dec. 1 Stock Investments... 75,000 72,500 2,500 Gain on Sale of Stock Investments 72,500 d. Aug. 1 Cash.. 72,500 Stock Investments....500 Dec. 1 Stock Investments.. 72,500 2,500 Cash.. Gain on Sale of Stock Investments

Explanation / Answer

B) Aug. 1    Stock Investment      72,500

                             Cash                                      72,500

       Dec. 1           Cash                       75,000

                         Stock investment                         72,500

                      Gain on sale of stock Investment     2,500

Note: At the time of purchase stock investment debited and cash goes out, so it will be credited. At the time of sale, cash coming in so it will be debited and stock investment and gain on sale will be credited.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.