Westbrook Financial Services, Inc. invested $15,000 to acquire 7,250 shares of C

Question

Westbrook Financial Services, Inc. invested $15,000 to acquire 7,250 shares of Cloud Investments, Inc. on March 15, 2015 This investment represents less than 20% of the investee's voting stock. On May 7, 2018, Westbrook Financial Services, Inc. sells 2,250 shares for $12,250. Which of the following will be the correct journal entry for the May 7, 2018 transaction? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) 12,250 OA. Cash O B. Cash ° C. Loss on Disposal O D. Cash Gain on Disposal Equity Investments Equity Investments Equity Investments 12,250 12,250 12,250 12.250 1225o 12,250 12,250 4,657 7,593 Gain on Disposal

Explanation / Answer

Answer : D.

Cash A/c 12,250

Equity Investments 4657

Gain on Disposal 7593

Explanation:

Equity Investment value of 7,250 Shares is $ 15,000.

Purchase price per share = $15,000/7,250 shares = 2.07 per share

Sale value of 2,250 shares = $12,250.

Equity investment cost of 2,250 shares = $ 4,657 (2,250 X 2.07)

Gain on Disposal = $7,593 (12,250-4657)

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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