At the end of its first year the trading securities portfolio consisted of the following common stocks. $80,000‾76,400‾$186,500‾$184,400‾\begin{array}{lrr}& \underline{\text { Cost }}& \underline{\text { Fair Value }}\\\text { Atrium Corporation } & \$ 46,500 & \$ 50,000 \\\text { Barnes Inc. } & 60,000 & 58,000 \\\text { Cantor Corporation } & \underline{80,000}& \underline{76,400} \\& \underline{ \$ 186,500} & \underline{ \$ 184,400}\end{array}$
In the following year the Barnes common stock is sold for cash proceeds of $57000. The gain or loss to be recognized on the sale is a

A) gain of $1200.
B) loss of $3000.
C) Loss of $1000.
D) loss of $2000.

Question

At the end of its first year the trading securities portfolio consisted of the following common stocks.    Cost  ‾  Fair Value  ‾  Atrium Corporation  $ 46 , 500 $ 50 , 000  Barnes Inc.  60 , 000 58 , 000  Cantor Corporation  80 , 000 ‾ 76 , 400 ‾ $ 186 , 500 ‾ $ 184 , 400 ‾ \begin{array}{lrr} &  \underline{	ext { Cost }} &  \underline{	ext { Fair Value }}\	ext { Atrium Corporation }  &  \$ 46,500  &  \$ 50,000 \	ext { Barnes Inc. }  &  60,000  &  58,000 \	ext { Cantor Corporation }  &  \underline{80,000} &  \underline{76,400} \ &  \underline{ \$ 186,500}  &  \underline{ \$ 184,400}\end{array}  Atrium Corporation   Barnes Inc.   Cantor Corporation  ​  Cost  ​ $46 , 500 60 , 000 80 , 000 ​ $186 , 500 ​ ​  Fair Value  ​ $50 , 000 58 , 000 76 , 400 ​ $184 , 400 ​ ​ In the following year the Barnes common stock is sold for cash proceeds of $57000. The gain or loss to be recognized on the sale is aA)  gain of $1200.B)  loss of $3000.C)  Loss of $1000.D)  loss of $2000.

peerapol monkthong · Accepted Answer

Final Answer : B, Explanation :  The loss to be recognized on the sale of Barnes common stock is calculated by subtracting the sale proceeds ($57,000) from the cost of the stock ($60,000), resulting in a loss of $3,000.

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