George bought the following amounts of Stock A over the years:(Loss amounts should be indicated with a minus sign.) Date Purchased Number of Shares Adjusted Basis Stock A 11/21/1993 1,030 $ 24,720 Stock A 3/18/1999 515 9,270 Stock A 5/22/2008 780 28,080 On October 12, 2019, he sold 1,245 of his shares of Stock A for $38 per share. a. How much gain/loss will George have to recognize if he uses the FIFO method of accounting for the shares sold?

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George bought the following amounts of Stock A over the years:(Loss amounts should be indicated with a minus sign

Accounting Aug 06, 2020

George bought the following amounts of Stock A over the years:(Loss amounts should be indicated with a minus sign.)

	Date Purchased	Number of Shares	Adjusted Basis
Stock A	11/21/1993	1,030	$	24,720
Stock A	3/18/1999	515		9,270
Stock A	5/22/2008	780		28,080

On October 12, 2019, he sold 1,245 of his shares of Stock A for $38 per share.

a. How much gain/loss will George have to recognize if he uses the FIFO method of accounting for the shares sold?

Expert Solution

Sale value of sold shares = 1245 shares * $38 = $47,310.

Using FIFO method , the cost of shares sold = 24720 + (1245-1030)*(9270/515) = $28,590

Gain to George on sale of shares = $47,310 - $28,590 = $18,720.

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