Shott Farm Supplies Corporation purchased 800 shares of Gene

Shott Farm Supplies Corporation purchased 800 shares of General Motors stock at $50 per share and paid a brokerage fee of $1,200. Two months later, the shares were sold for $53 per share. The brokerage fee on the sale was $1,300 Required: Prepare entries for the purchase and the sale.

Solution

Account titles and explanation

Debit

Credit

Investment ($50*800)+$1,200

$ 41,200.00

Cash

$ 41,200.00

(To record purchase of shares)

Cash ($53*800)+$1300

$ 43,700.00

Gain on sale of investment

$ 2,500.00

Investment

$ 41,200.00

(To record sale of shares)

Account titles and explanation	Debit	Credit
Investment ($50*800)+$1,200	$ 41,200.00
Cash		$ 41,200.00
(To record purchase of shares)
Cash ($53*800)+$1300	$ 43,700.00
Gain on sale of investment		$ 2,500.00
Investment		$ 41,200.00
(To record sale of shares)