Prepare journal entries for each of the following unrelated transactions. You may omit explanations for the journal entries.
a. A firm issues 5,000 shares of $2 par value common stock in exchange for $20,000 cash.
b. A firm acquires a building with an appraised value of $100,000 for $30,000 cash and the assumption of a 25-year, 10% mortgage with a balance of $60,000.
c. Acquires $1,000 (list price) of inventory for $980 cash. The firm treats cash discounts as a reduction in acquisition cost.
d. A firm pays $1,000 to its landlord. The $1,000 represents the current month's rent plus the next month's rent payment in advance.
e. A publisher sells $2,000 in magazine subscriptions that will be filled over the next 12 months.
Solution Preview
a. A firm issues 5,000 shares of $2 par value common stock in exchange for $20,000 cash.
The common stock would be credited for the par value = 5,000X2=$10,000. The remaining amount would be paid in capital in excess of par. The journal entry is
Cash Dr 20,000
Common Stock Cr 10,000
Paid in Capital in excess of par Cr 10,000
b. A firm acquires a building with ...
Solution Summary
The solution explains journal entries relating to stock issue, asset purchase, inventory, rent and subscriptions
... retail stores incentives to stock their merchandise ... complex recognition and measurement issues: Income tax ... is transferred from the inventory asset to the ...
... of profit and represents a significant asset in many ... target is mainly due to specific issues in a ... Nevertheless, America caused by sharp de-stocking in the ...
... 2,500 Unearned Revenue 1,200 Common Stock 10,000 Retained ... The issue is important because the outlays for ... Expenses advertising, rent, recorded in asset stated. ...
... tax deferrals, and hefty use of stock options, the ... The key accounting issue is whether there should be ... structures b. An excess of appreciated asset value over ...
... believe that inflation rebound in the stock market has ... on higher inventory turns and returns on assets. ... vendor's profitability became a critical issue in 1999. ...
... 162.0 172.0 184.0 196.0 209.0 Asset Sales Proceeds ... for question 1, involving the stock market reaction ... Valuation Spreadsheet to use for certain problems below. ...
... for Kudler Fine Foods will be an asset while promoting ... and try to address any and all problems quickly. ... only sells utensils, the Kitchen Witch can stock a much ...
... disposability, often the one indispensable asset of corporations ... the intrinsic value of our common stock. ... to supply disruptions or quality problems, which will ...
... However, problems arise when buyers are not sure if ... third source of revenue: IPOs or stock market ... because their industry involves business with expiring assets. ...
