On May 18,of Last Year,Yuji Sold Unlisted Stock with a Cost

question 114

Multiple Choice

On May 18,of last year,Yuji sold unlisted stock with a cost of $12,000 for $30,000.Yuji collected $10,000 initially and is scheduled to receive $5,000 each year for four years starting this year plus an acceptable rate of interest.After receiving the first scheduled $5,000 payment,Yuji was unable to collect any further payments.After incurring legal fees of $500,Yuji recovered a portion of the stock valued at $13,000.Yuji's basis in the recovered stock is

• A)$6,500.
• B)$7,000.
• C)$12,500.
• D)$13,000.

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Definitions:

Process Costing System

An accounting system used to track and allocate costs of production to individual units of output in industries where production is continuous and similar items are produced.

Conversion Costs

The costs associated with converting raw materials into finished products, typically including labor and overhead expenses.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all items available for sale.

Painting Department

A particular section or division in a manufacturing facility dedicated to painting products or parts.