2 Issued 1000 shares of stock for land appraised at 50000 The stock was

2 issued 1000 shares of stock for land appraised at

This preview shows page 2 - 4 out of 6 pages.

2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance. 3. Purchased 500 shares of treasury stock at $43 per share. The treasury shares purchased were issued in 2010 at $40 per share. (a) Prepare the journal entry to record item 1. Cash (5,000 x $45 - $7,000) ................... 218,000 Common Stock (5,000 x $5) ....................................... 25,000 Additional Paid-in Capital ......................................... 193,000 (b) Prepare the journal entry to record item 2. Land (1,000 x $46) ................................... 46,000 Common Stock (1,000 x $5) ......................................... 5,000 Additional Paid-in Capital ........................................... 41,000 Note: The fair value of the stock is used to value the exchange because it is a more objective measure than the appraised value of the land. (c) Prepare the journal entry to record item 3 using cost method. Treasury Stock (500 x $43) ...................... 21,500 Cash ............................................................................ 21,500 E 15-13 (Stock Split and Stock Dividend) The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase 2
Image of page 2
ACCT 301B 2/10/2014 Professor P. Woodward share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million shares are issued and outstanding. Prepare the necessary journal entries assuming the following. (a) The board votes a 2-for-1 stock split (b) The board votes a 100% stock dividend. (c) Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding. (a) No entry – simply a memorandum note indicating the number of shares has increased to 18 million and par value has been reduced from $10 to $5 per share. (b) Retain Earnings ($10 x 9,000,000) ..................... 90,000,000 Common Stock Dividend Distributable .............................. 90,000,000 Common Stock Dividend Distributable ............... 90,000,000 Common Stock ................................................................... 90,000,000 (c) Stock dividends and splits serve the same function with regard to the securities markets. Both
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 6 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture