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.
perpare entries for the purchase and the sale.
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.
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To prepare the journal entries for the purchase and sale of General Motors stock by Shott Farm Supplies Corporation, we need to record the transactions.
1. Purchase of General Motors Stock:
The purchase includes buying 800 shares of General Motors stock at $50 per share, along with paying a brokerage fee of $1,200. The journal entry would be as follows:
Date Account Debit Credit
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[Date] General Motors Stock $40,000
Cash $40,000
(To record the purchase of shares)
[Date] Brokerage Fee Expense $1,200
Cash $1,200
(To record the payment of brokerage fee)
2. Sale of General Motors Stock:
The sale involves selling the 800 shares of General Motors stock for $53 per share, and incurring brokerage fees of $1,300. The journal entry would be as follows:
Date Account Debit Credit
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[Date] Cash $42,400
General Motors Stock $40,000
Gain on Sale of Stock $2,400
(To record the sale of shares and gain on sale)
[Date] Brokerage Fee Expense $1,300
Cash $1,300
(To record the payment of brokerage fee)
Note: The "Gain on Sale of Stock" account reflects the difference between the selling price ($53) and the purchase price ($50) per share, multiplied by the number of shares (800). In this case, it equals $2,400 ($53 - $50 x 800 shares).
Remember to substitute "[Date]" with the actual date of the transaction.