Question

Jarvis Corporation makes an investment in 100 shares of Saxton Company's common stock. The stock is purchased for $45 a share plus brokerage fees of $280. The entry for the purchase is

a. Cash4,500 Investments—Saxton Company Stock4,500
b. Investments—Saxton Company Stock4,780 Cash4,780
c. Investments—Saxton Company Stock4,500 Brokerage Fee Expense280 Cash4,780
d. Investments—Saxton Company Stock4,500 Cash4,500

Answer 1

Answer:

b. Investments—Saxton Company Stock4,780 Cash 4,780

Explanation:

answer is D, we will increase the investment value with the brokerage cost since it is a cost incurred to acquire the assets, in this case that is shares.