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The D asenso corp issued 5000 shares of common stock at 100.00 per share. Of this, Eugene owns 500 shares which he acquired at 100 per share. In December, 2013 the corporation declared and paid 25% stock dividend payable in preferred stock. Eugene sold all his stock dividend shares at 120 per share on February 10, 2014. Required: a. Compute the gain or loss on sale of stock dividend shares, assuming that at the time of payment of the stock dividend, the fair market value of the shares of stock are: Common: 110 per share Preferred: 110 per share b. Compute the capital gain due on said sale

The D asenso corp issued 5000 shares of common stock at 100.00 per share. Of this, Eugene owns 500 shares which he acquired at 100 per share. In December, 2013 the corporation declared and paid 25% stock dividend payable in preferred stock. Eugene sold all his stock dividend shares at 120 per share on February 10, 2014. Required: a. Compute the gain or loss on sale of stock dividend shares, assuming that at the time of payment of the stock dividend, the fair market value of the shares of stock are: Common: 110 per share Preferred: 110 per share b. Compute the capital gain due on said sale

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The D asenso corp issued 5000 shares of common stock at 100.00 per share. Of

this, Eugene owns 500 shares which he acquired at 100 per share. In December,

2013 the corporation declared and paid 25% stock dividend payable in preferred

stock. Eugene sold all his stock dividend shares at 120 per share on February 10,

2014.

Required:

a. Compute the gain or loss on sale of stock dividend shares, assuming that at the

time of payment of the stock dividend, the fair market value of the shares of stock

are:

Common: 110 per share

Preferred: 110 per share

b. Compute the capital gain due on said sale

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