On January 4,Year 1,Barber Company Purchased 5,000 Shares of Convell

Multiple Choice

On January 4,Year 1,Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker's fee of $1,000.Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell.During each of the next two years,Convell declared and paid cash dividends of $0.85 per share,and its net income was $72,000 and $67,000 for Year 1 and Year 2,respectively.The January 12,Year 3,entry to record Barber's sale of 3,000 shares of Convell Company stock,which represents 60% of Barber's total investment,for $39,000 cash should be:

A) Debit Cash $39,000;debit Loss on Sale of Investment $8,200;credit Long-Term Investments $47,280.
B) Debit Cash $39,000;debit Loss on Sale of Investment $8,880;credit Long-Term Investments $47,880.
C) Debit Cash $39,000;credit Gain on Sale of Investment $2,700;credit Long-Term Investments $36,300.
D) Debit Cash $39,000;credit Gain on Sale of Investment $8,750;credit Long-Term Investments $30,250.
E) Debit Cash $39,000;debit Loss on Sale of Investment $21,500;credit Long-Term Investments $60,500.