Chapter 4, # 25

I do not think we really spent enough time on this for me to ask you a computational question about this, but the way that it is done is this:

The sale happens Oct 1, 2001, so 3/4 of the year has passed. We can split NI of 120: 90 pre sale, 30 post sale and Div of 40: 30 pre sale, and 10 post sale. You should have calculated amortization of 14 per year from the information given. So question a) asks for the 2011 income accrued to the 1000 shares up to the date of sale (the question is worded a little strangely in the text also). So here's your calculation:

Investment income assigned to these shares: 90 pre sale inc x .7 original ownership x 1/7 (based on 1000 of the 7000 shares) = 9
- Amortization of 14 x 3/4 of a year x .7 ownership x 1/7 = (1.05)
Income accrued to the 1000 shares sold = 7.95

I believe this differs from the solution and the check figure.