Issuance of stock for cash and noncash assets (Learning Objective 3) 10-15 min.
This exercise shows the similarity and the difference between two ways to acquire plant assets.
Case A—issue stock and buy the assets in separate transactions:
Apex, Inc., issued 10,000 shares of its $10 par common stock for cash of $600,000. In a separate transaction. Apex, Inc. purchased a building for $475,000 and equipment foe $125,000 and paid cash. Journalize the two transactions.
Case B—issue stock to acquire the assets:
Apex, Inc.. issued 10,000 shares of its $10 par common stock to acquire a building with a fair market value of $475,000 and equipment with a fair market value of $125,000. Journalize this single transaction.
Compare the balances in all accounts after making both sets of entries. Are the account balances similar or different?
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Financial Accounting, Student Value Edition (4th Edition)
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