During 2014 Logic Company purchased 8,000 shares of Midi, Inc. for $30 per share

Question

During 2014 Logic Company purchased 8,000 shares of Midi, Inc. for $30 per share. The investment was classified as a trading security. During the year Logic Company sold 2,000 shares of Midi, Inc. for $35 per share. At December 31, 2014 the market price of Midi, Inc.’s stock was $28 per share. What is the total amount of gain/(loss) that Logic Company will report in its income statement for the year ended December 31, 2014 related to its investment in Midi, Inc. stock?

a.   ($16,000)

b.   $10,000

c.   ($6,000)

d.   ($2,000)

Explanation / Answer

option d    ($2,000)

Gain on sale = 2000 ( $35 - $30)            = $10,000

Unrealised loss= 6000(30-$28)            = ($12,000)

Net                                                         = $(2,000)loss

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

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