Answer:
$102,500
Explanation:
As per the given question the solution of gain be on sale is provided below:-
For reaching the gain be on sale first we need to follow some steps which is following below:-
Step 1
December 31, 2021 Investment = Initial investment + Net income - Dividend
= $1,060,000 + ($364,000 × 40%) - ($250,000 × 40%)
= $1,060,000 + $145,600 - $100,000
= $1,205,600 - $100,000
= $1,105,600
Step 2
July 1,2022 Investment = December 31, 2021 Investment + Net income - Dividend
= $1,105,600 + ($533,000 × 6 months ÷ 12 months × 40%) - ($138,000 × 40%)
= $1,105,600 + $106,600 - $55,200
= $1,212,200 - $55,200
= $1,157,000
Step 3
Now, the investment half value = $1,157,000 ÷ 2
= $578,500
and finally
So, Gain = Stock - Half value of Investment
= $681,000 - $578,500
= $102,500
So, we have calculated the gain be on sale in Sheridan's 2022 income statement by using the above formula.
