Question

On February 15, Jewel Company buys 7,200 shares of Marcelo Corp. common stock at $28.55 per share plus a brokerage fee of $410. The stock is classified as available-for-sale securities. On March 15, Marcelo Corp. declares a dividend of $1.17 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $29.32 per share less a brokerage fee of $260. The fair value of the remaining shares is $29.52 per share. The amount that Jewel Company should report on its year-end December 31 income statement related to the investment in Marcelo Corp. is (Round your intermediate and final dollar values to the nearest dollar amount):

$3,287.

$10,731.

$8,424.

$5,732.

$2,307.

Answer 1

Answer: $10731

Dividend received (7200 x $1.17)	8424
Gain on sale of shares*	2307
	10731

*Sale price [(3600 x $29.32) - $260]	105292
Less: Cost [(7200 x $28.55) + $410]/2	102985
Gain on sale of shares	2307

The dividend revenue and realised gain on sale of AFS investment will be reported in the income statement while the unrealized gain (loss) on year-end changes in fair value will be reported as a part of stockholders' equity and excluded from the income statement.