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Memo Report

Essay by   •  March 18, 2012  •  Essay  •  258 Words (2 Pages)  •  2,481 Views

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To: Abel Terrio, Jackson Company

From: your name here, Jackson company Accountant

Date: January 1, 2012

Subject: Income statement inquiry

I understand your concern with the 6,000 dollar loss to the common stock Black Hawk Co. I assure you that the information you have reviewed is accurate. I would be happy to break down the information of the loss for you so that you may have a better understanding of how this particular stock did not inherit the 75,000 you believe that it should have.

You purchased the 50,000 shares of the stock at 500,000 in December 31, 2009, with a 40% interest value. Your net income on investments for the year of 2010 was reported $126,000. At 40% of $126,000 your total interest earned was 50,400. Your 2011 net income report for your investments showed an amount of 202,500 dollars. You sold your Black Hawk stock at $575,000. However, with a 40% interest earned of 202,500, the amount earned was $81,000. You gained 75,000 dollars extra for your sale of Blackhawk Company, but being that your total investment for the stock only earned 81,000 and the sale yield 75,000 you accumulated a 6,000 dollar loss.

I can understand the confusion with this stock and believing that it should show a 75,000 gain. Being that you sold it under the amount of the interest earned and not above you inquired a loss with this stock. It was a 6,000 dollar difference in your sale to the gained interest. I apologize for the inconvenience and confusion over this stock.

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