On February 1, John buys 200 shares of GJF company stock for $50 per share. On August 1, John...

Question:

On February 1, John buys 200 shares of GJF company stock for $50 per share. On August 1, John sells all 200 shares of GJF stock for $25 per share. On August 16, John buys 100 shares of GJF stock for $30 per share. How much of a loss on GJF stock may John claim for the year?

A: None

B: $2,500

C: $3,000

D: $5,000

E: $6,000

Profit/ Loss on Investment:

Loss on investment can be claimed in the year the loss on the investment is booked.

Answer and Explanation:

Loss that can be claimed by John = ($25 - $50) x 200 = $5000

Since John has sold 200 shares he can claim the loss on the same i.e. $5000 (Option D).


Learn more about this topic:

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Net Loss: Definition & Formula

from Financial Accounting: Homework Help Resource

Chapter 1 / Lesson 23
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