Finch, Inc., purchases 1,000 shares of Bluebird Corporation stock on October 3,

Question

Finch, Inc., purchases 1,000 shares of Bluebird Corporation stock on October 3, 2017, for $400,000. On December 12, 2017, Finch purchases an additional 750 shares of Bluebird stock for $280,000. According to market quotations, Bluebird stock is selling for $400 per share on 12/31/17. Finch sells 500 shares of Bluebird stock on March 1, 2018, for $224,000.

What is Finch’s recognized gain or loss from the sale of Bluebird stock on March 1, 2018, assuming the shares sold are from the shares purchased on December 12, 2017? In your computations, round the per share amount to the nearest whole dollar and use the rounded amount in subsequent computations.

Explanation / Answer

Recognisition of gain or loss on March 1, 2018 Particulars Amount Sales value per share 448 Opening value per share -400 Profit per share 48 No. of Shares sold 500 Shares Amount to be recognized as on March 1, 2018 24000 Note: Value of shares will be raised to 400 per share in books as on December 31, 2017.

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