Answer:
- 41.67%
Explanation:
For computing the rate of return first we have to compute the initial investment which is shown below:
= Number of shares × per share × initial margin percentage
= 300 shares × $60 per share × 60%
= $10,800
Now Loss on sale of common stock is
= (Selling price - purchase price) × number of shares purchased
= ($45 - $60 ) × 300 shares
= - $4,500
So the rate of return will be:
= Loss ÷ Initial Investment
= - $4,500 ÷ $10,800
= - 41.67%
Answer and Explanation:
The journal entries are shown below:
On Jan 1, 2014
Unearned compensation Dr. $45,000
To paid in capital in excess of par $35,500
To common stock $9,500
(Being the unearned compensation is recorded)
On Dec 31,2014
Compensation expense Dr. $15,000 ($45,000 ÷ 3 years)
To unearned compensation $15,000
(Being one year compensation became due is recorded)
