Question

an investor purchased 687 shares of common stock, $23 par, for $24,045. subsequently, 116 shares were sold for $27 per share. what is the amount of gain or loss on the sale? a. $928 gain b. $1,392 loss c. $1,392 gain d. $928 loss

Answer 1

The first step is to calculate the cost per share of the 687 shares of common stock:

Cost per share = Total cost / Number of shares
Cost per share = $24,045 / 687
Cost per share = $35

Next, we can calculate the cost of the 116 shares that were sold:

Cost of 116 shares = 116 shares x $35 per share
Cost of 116 shares = $4,060

Since the shares were sold for $27 per share, the investor incurred a loss. We can calculate the loss as follows:

Loss = Proceeds from sale - Cost of shares sold
Loss = (116 shares x $27 per share) - $4,060
Loss = $3,132 - $4,060
Loss = -$928

Therefore, the amount of loss on the sale is $928. Answer: d) $928 loss.