Question

During 2017, Crane Company purchased 91000 shares of Holmes Corporation common stock for $1370000 as an equity investment. The fair value of these shares was $1299000 at December 31, 2017. Crane sold all of the Holmes stock for $16 per share on December 3, 2018, incurring $67000 in brokerage commissions. Crane Company should report a realized gain on the sale of stock in 2018 of ____

Answer 1

Gain on sale 19,000

Step-by-step explanation:

Other comprehensive income for 2017

1.299.000 - 1,370,000 = -71,000

91,000 shares x $16 per share = 1,456,000

commissions (67,000)

net proceeds 1,389,000

acquisition (1,370,000)

Gain on sale 19,000

The joural entry should be:

Cash 1,389,000

OTI (loss) 71,000

Holmes shares 1,299,000

Gain on sale 19,000