Saturday, July 10, 2010

When accounting for sale of stock, do you include purchase and sale commission expenses in the journal entry?

If selling a stock that has a sales commission expense already taken out of the incoming check, do you debit cash for the full stock sale price and credit both marketable securities and other operating expense, or do you debit cash for only the net amount of the check?When accounting for sale of stock, do you include purchase and sale commission expenses in the journal entry?
Stock transactions are recorded at their net amounts. When you buy a stock and pay a commission, the commission simply becomes part of the cost. It is not reported separately. Similarly, when yo sell the stock and pay a commission, the sale is recorded at the net amount received: sales price minus commission. Your gain or loss is the difference between the total amount paid to buy and the net amount received from the sale.

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