Question
MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities
MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities during 2021-2022. The company's fiscal year ends on December 31. No trading securities were held by MS on Jan 1, 2021.
2021
May 1) Purchased 10,000 shares of Apple stocks for $120 per share
Jun 1) Purchased 10,000 shares of Apple stocks for $145 per share
Jul 1) Sold 15,000 shares of Apple stocks for $140 per share.
Sep 1) Purchased 2,000 shares of Apple stocks for $130 per share
Nov 1)Received dividend $50,000
Dec 31) Market price for Apple is $150 per share
2022
Apr 1) Purchased 3,000 Apple stocks for $160 per share
May 1) Sold 2,000 Apple stocks for $150 per share
July 1) Purchased 8,000 Apple stocks for $180 per share
Aug 1) Sold 6,000 shares of Apple stocks for $190 per share
Dec 31) Market price for Apple is $220 per share
MS tracks stock costs uses the first-in first-out cost-basis assumption. What is total effect of the investment in Apple on MS's 2021 net income?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started