On June 1, 2012, Rouge Corp purchased Noir Corp common shares for $9,300 as a trading investment. Three months later, Rouge sold these shares for $10,000. The entry to record the sale would include a
A)debit to Cash of $9,300.
B)credit to Interest Revenue of $700.
C)credit to Trading Investments of $10,000.
D)credit to Realized Gain on Trading Investments of $700.

Question

Quizplus · Accepted Answer

The entry to record the sale of the trading investment would include a debit to Cash for $10,000 (the amount received), a credit to Trading Investments for $9,300 (the original cost of the investment), and a credit to Realized Gain on Trading Investments for $700 (the difference between the selling price of $10,000 and the original cost of $9,300). Therefore, the correct choice is D.

On June 1, 2012, Rouge Corp Purchased Noir Corp Common