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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Issuing stock for assets other than cash Obj.5
On August 7. Easy Up Corporation, a wholesaler of hydraulic lifts, acquired land in exchange for 20.000 shares of $10 par common stock with a current market price of $14.
Illustrate (he effect on the accounts and financial statements of the purchase of the land.

To determine

Concept Introduction:

Stocks (Common Stock and Preferred Stock):

There are two types of the share capital of a company. Common Stock represents the Common shares issued to the shareholders and preferred stock represents the preference shares issued. Preference shares are given preference in payment of dividends and repayment of capital. Common shareholders get the inbuilt right to vote in decisions of the company and preference shareholders generally do not get this right but they may get voting rights with special provisions.

To Indicate:

The effect of the transaction on the accounts and financial statements

Explanation

The effect of the transaction on the accounts and financial statements is explained as follows:

    Date Account Account TypeFinancial Statement Amount Increase or Decrease
    Aug. 7LandAssetBalance sheet $ 280,000 Increase
    (20000*14)

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