1. Investment in Red Corporation stock 2/5/16 You purchase 3,600 shares of Red C

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1. Investment in Red Corporation stock 2/5/16 You purchase 3,600 shares of Red Corporation stock for $4.20 per share. (Red Corporation has 194,000 shares outstanding.) You pay a broker fee of $468. 7/31/16 You receive $0.05 per share as a dividend payment from Red Corporation. 12/31/16 Red Corporation declares net income of $3,960. 11/15/17 You sell 900 of your shares of Red Corporation stock for $4,095. In addition, you pay a broker fee of $81. What is the amount of the gain or loss on the sale of the shares on 11/15/17? Enter a GAIN as a positive number or a LOSS as a negative number using a minus sign. 1. Investment in Red Corporation stock 2/5/16 You purchase 3,600 shares of Red Corporation stock for $4.20 per share. (Red Corporation has 194,000 shares outstanding.) You pay a broker fee of $468. 7/31/16 You receive $0.05 per share as a dividend payment from Red Corporation. 12/31/16 Red Corporation declares net income of $3,960. 11/15/17 You sell 900 of your shares of Red Corporation stock for $4,095. In addition, you pay a broker fee of $81. What is the amount of the gain or loss on the sale of the shares on 11/15/17? Enter a GAIN as a positive number or a LOSS as a negative number using a minus sign. Answer each of the following questions in the spaces pravided A green Correct wil appear to the night of each correct answer Enler calculations, particularty for those hat are not marking Correct, in the gray boxes noar each question 1· investment in Red Corporation stock . 25/16 You purchase 3,600 shares of Red Corporation stock for $4.20 per share. (Red Corporation has 194,000 shares outstanding) You pay a broker fee of $468 7/31/16 You receive $0.05 per share as a dvidend payment from Red Corporation 2/31/16 Red Corporation daclares net income of $3,960 1/15/17 You sell 900 of your shares of Red Corporation stock for $4,095 In addition, you pay a broker fee of $81 What is the amount of the gain or loss on the sale of the shares on 11/15/17? Enter a GAIN as a positive number or a LOSS as a negative number using a minus sign

Explanation / Answer

Amount No of shares Per share Cost of investment $        15,588               3,600           4.33 (3600 x $4.20 + $468) Sale price of 900 shares $4,095 Less: brokerage $81 Net sales price $4,014 Less: cost of 900 shares              3,897 Net Gain                  117 Ans Note: Dividend received is recorded as dividend revenue since share holding is only (3600/194000) = 1.86%, so no recognition of net income

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