Answered: During 2021, Bob Collins purchased 300… | bartleby

Intermediate Accounting: Reporting And Analysis

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 3E

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Question

**Stock Investment Calculation Example**

During 2021, Bob Collins purchased 300 shares of common stock issued by Doctor's Medical Supply for $14,600, including commission. Later in the same year, Bob sold the shares for $15,600 after commission. Calculate the following (round all answers to two decimal places):

1. **Profit on this stock transaction:** $\_\_\_

2. **Percentage return on investment:** $\_\_\_%

To solve these, follow the steps below:

**1. Calculating Profit:**
- Subtract the purchase cost from the selling price.
- Profit = Selling Price - Purchase Price = $15,600 - $14,600

**2. Calculating Percentage Return on Investment:**
- Divide the profit by the initial purchase cost, then multiply by 100 to get the percentage.
- Percentage Return = (Profit / Purchase Price) × 100

Ensure all calculations are rounded to two decimal places for precision.

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