JP Industries Purchased 2,000 Shares of Yang's Common Stock for $143,000

question 70

Multiple Choice

J.P. Industries purchased 2,000 shares of Yang's common stock for $143,000 as a long-term investment. The investment is classified as available-for-sale securities. The par value of the stock was $1 per share. J.P. paid $375 in commissions on the transaction. J.P.'s entry to record the purchase transaction would include a:

• A) Credit to Common Stock for $143,375.
• B) Debit to Long-Term Investments-AFS for $143,375.
• C) Debit to Long-Term Investments-AFS for $143,000.
• D) Credit to Common Stock for $2,000.
• E) Credit to Common Stock for $143,000.

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Definitions:

Conversion

The act of changing one form of securities into another, such as converting bonds into shares of stock, or the process of changing one currency into another.

Trading Securities

Financial securities that are purchased and held primarily for sale in the near term to generate income on short-term price differences.

Unrealized Holding

A profit or loss that arises from the change in value of an investment that has not yet been sold or realized.