Question

a half-acre parcel of land adjacent to the building is acquired in exchange for 600 shares of unissued common stick. The land has a fair value of $54,000 and will be used immediately as an outside storage lot and parking lot.

Answer 1

1)directors declared a $2.70 per-share cash dividend payable on Jan 14 to stockholders of record on DEC 27 (after purchase of stock. You need to know how many shares are outstanding. If there were 100,000 shares outstanding, the entry would be: Debit Retained Earnings $270,000 Credit Dividends Payable $270,000 2)the president informs you that Beverly's Building products agrees to convert the $14,000 overdue accounts recievable (invoice 1119) balance to a 12 % note due six months from today. Debit Notes Receivable (Short Term) $14,000 Credit Accounts Receivable $14,000 3)a half-acre parcel of land adjacent to the building is acquired in exchange of 600 shares of unissued common stock. the land has a fair value of $54,000 and will be used immediately as an outside storage lot and parking lot. Debit Land $54,000 Credit Common Stock $54,000 - But if the shares have a par value then the credit to common stock would be 600 times the par value per share. The remaining credit (to come to the $54,000 total) would be recorded to Additional Paid In Capital 4)an invoice in the amount of 2650 is received from Wayne McManus lawyer, for legal services involved in the acquisition of the adjacent parcel of land: check No. 1596 is issued in payment. You can include the cost incurred (including legal fees) to acquire the land in the capitalized value of the land. The entry would therefore be: Debit Land $2,650 Credit Cash $2,650