Homework Problem 8-1 - 572 Total Cost of 149 shares $4,030...

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Solution to Problem 8-1 Facts : Ms. Wells makes the following purchases and sales of shares: Memo Inc Dates of Purchase Dates of Sale # and Cost Feb. 2006 60 @ $24 Nov. 2007 90 @ $28 Apr 2008 45 @ $30 Oct. 2008 Sale (68) @ $36 Sept. 2010 22 @ 26 Nov. 2010 Sale (53) @ 40 Demo Ltd. Dates of Purchase Dates of Sale # and Cost Apr. 2009 200 @ $24 Dec. 2009 160 @ $33 July 2010 Sale (260) @ 36 What are the tax implications?
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Memo Inc. : February Purchase: 60 @ $24 $1,440 Nov. Purchase: 90 @ $28 2,520 April Purchase: 45 @ $30 1,350 Total Cost of 195 Shares $5,310 Average Cost: $5,310 ÷ 195 = $27.23 68 Shares are sold on October 2008. The Tax Implications are: Proceeds of Sale: 68 shares @ $36 $2,448.00 ACB: 68 shares @ $27.23 (1,851.64 ) Capital Gain $ 596.36 Taxable Capital Gain $ 298.18 Balance in the account of Memo Shares: (195 – 68) shares X $27.23 avg. cost = 127 shares @ $3,458 Opening Balance: $3,458 Sept. 2010 Purchase: 22 @ $26
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Unformatted text preview: 572 Total Cost of 149 shares $4,030 Average Cost: $4,030 ÷ 149 = $27.05 53 Shares are sold on Nov. 2010. The Tax Implications are: Proceeds of Sale: 53 shares @ $40 $2,120.00 ACB: 53 shares @ $27.05 (1,433.65 ) Capital Gain $ 686.35 Taxable Capital Gain $ 343.18 Balance in the account of Memo Shares: (149 – 53) shares X $27.05 average cost = 96 shares @ $2,597 Demo Shares : April 2009 Purchase: 200 @ $ 24 $ 4,800 December 2009 Purchase: 160 @ $33 5,280 Total cost of 360 Shares $10,080 Average Cost: $10,080 ÷ 360 = $28.00 260 Shares are sold in July 2010 and the Tax Implications are: Proceeds of Sale: 260 shares @ $36 $9,360 ACB: 260 shares @ $28.00 (7,280 ) Capital Gain $2,080 Taxable Capital Gain $1,040 Balance in the account of Demo Shares: (360 – 260) shares X $28.00 average cost = 100 shares @ $2,800...
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Homework Problem 8-1 - 572 Total Cost of 149 shares $4,030...

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