On August 1 Masters Company buys 2000 shares of ABD common stock for $72500 cash. On December 1 the stock investments are sold for $75000 in cash. Which of the following are the correct journal entries to record for the purchase and sale of the common stock?

Learning Objectives

• Evaluate the consequences of securities transactions (purchases, sales, and receipt of dividends) on a financial statement of an investor.
• Distinguish between short-term and long-term investment approaches, along with their corresponding accounting methods.