Question

1.

Investment in Red Corporation stock

2/5/16

You purchase 3,600 shares of Red Corporation stock for $4.20 per share. (Red Corporation has 194,000 shares outstanding.) You pay a broker fee of $468.

7/31/16

You receive $0.05 per share as a dividend payment from Red Corporation.

12/31/16

Red Corporation declares net income of $3,960.

11/15/17

You sell 900 of your shares of Red Corporation stock for $4,095. In addition, you pay a broker fee of $81.

What is the amount of the gain or loss on the sale of the shares on 11/15/17? Enter a GAIN as a positive number or a LOSS as a negative number using a minus sign.

Answer 1

	Amount	No of shares	Per share
Cost of investment	$        15,588	3,600	4.33
(3600 x $4.20 + $468)
Sale price of 900 shares	$4,095
Less: brokerage	$81
Net sales price	$4,014
Less: cost of 900 shares	3,897
Net Gain	117	Ans
Note: Dividend received is recorded as dividend revenue since share holding
is only (3600/194000) = 1.86%, so no recognition of net income