Issuing stock for assets other than cashKaylee Corporation was formed when it issued share...

Issuing stock for assets other than cash

Kaylee Corporation was formed when it issued shares of common stock to two of its shareholders. Kaylee issued 5,000 shares of $10 par common stock to K. Breslin in exchange for $60,000 cash (the issue price was $12 per share). Kaylee also issued 2,500 shares of stock to T. Lindsay in exchange for a one-year-old delivery van on the same day. Lindsay had originally paid $35,000 for the van.

Required

a.What was the market value of the delivery van on the date of the stock issue?

b. Show the effect of the two stock issues on Kaylee’s books in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.