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MMLU / Lemon owned 2000 shares of Spectrol Corp. common stock that were purchased in…

Problem

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question

Lemon owned 2000 shares of Spectrol Corp. common stock that were purchased in year 1 at $10.50 per share. In year 4 Lemon received a 5% non-taxable dividend of Spectrol common stock. In year 5 the stock split 2-for-1. In the current year Lemon sold 800 shares. What is Lemon's basis in the 800 shares of stock sold?

choices

  1. $4,000
  2. $8,000
  3. $8,400
  4. 16800

subject

professional_accounting

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