And if the prices were different on the two purchases?

On Fri, 29 Oct 2004 19:16:48 -0600, "Fred Smith"
wrote:

If you are calculating average price for tax purposes, it's only buys
(positive quantities) which affect the average. So use the formulas
suggested only for positive quantities.

In the example you gave, your average cost is $1.50. Even though you sold 5
at $1.25, the cost of the remaining 15 shares is still $1.50 each.