substantially more risky than
substantially more risky than Eagle’s current business. Eagletransferred the following assets and accounts payable to SandCorporation in exchange for 5,000 shares of $10 par value stock ofSand: Cost Book Value Cash $ 30,000 $ 30,000 Accounts Receivable45,000 40,000 Inventory 60,000 60,000 Land 20,000 20,000 Buildings& Equipment 300,000 260,000 Accounts Payable 10,000 10,000Required: a. Prepare the journal entry that Eagle recorded for thetransfer of assets and accounts payable to Sand. (If no entry isrequired for a transaction/event, select “No journal entryrequired” in the first account field.) Show work and how you cameto the different numbers ex : investment in common stock
Answer:
| Eagle Corporation | |||||
| Journal Entries in the books of Eagle Corporationfor transfer of assets to Sand Corporation | |||||
| General,Journal | |||||
| Particular | Debit | Credit | |||
| Investment in Sand Corporation Common stock(Balancingfigure) | $ 400,000.00 | ||||
| Allowance for uncollectible AccountsReceivable=($45000-$40000) | $ 5,000.00 | ||||
| Accumulated Depreciation=($300000-$260000) | $ 40,000.00 | ||||
| Accounts Payable | $ 10,000.00 | ||||
| To Cash | $ 30,000.00 | ||||
| To Accounts Receivable | $ 45,000.00 | ||||
| To Inventory | $ 60,000.00 | ||||
| To Land | $ 20,000.00 | ||||
| To Building & Equipment | $ 300,000.00 | ||||
| (Being amount of Assets and Liabilities transfer to SandCorporation) | |||||
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