Question

Garner Company exchanged 600 shares of Eller Company common stock, which Garner was holding as an investment, for equipment from West Company. The Eller Company common stock, which had been purchased by Garner for $50 per share, had a quoted market value of $58 per share at the date of exchange. The equipment had a recorded amount on West's books of $32,000. What journal entry should Garner make to record this exchange?
a. Equipment ............................................................................. 30,000
Investment in Eller Co. Common Stock ...................... 30,000
b. Equipment ............................................................................. 32,000
Investment in Eller Co. Common Stock ...................... 30,000
Gain on Disposal of Investment .................................. 2,000
c. Equipment ............................................................................. 32,000
Loss on Disposal of Investment ............................................ 2,800
Investment in Eller Co. Common Stock ...................... 34,800
d. Equipment ............................................................................. 34,800
Investment in Eller Co. Common Stock ...................... 30,000
Gain on Disposal of Investment .................................. 4,800