As an auditor for the CPA firm of Hinkson and Calvert, you encounter the followi

Question

As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients.

Prepare the journal entries for each of the situations above. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

1. LR Corporation is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 5,000 shares of its $19 par value common stock. The owners’ asking price for the land was $120,000, and the fair value of the land was $120,000. 2. Vera Corporation is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing 21,000 shares of its $11 par value stock. At the time of the exchange, the land was advertised for sale at $272,000. The stock was selling at $12 per share.

Explanation / Answer

Account Title Debit Credit 1 Land(Fair Value) 120000 Common Stock(5000*19) 95000 Aditional Paid-in -Capital(120000-95000) 25000 2 Land 252000 Common Stock(21000*11) 231000 Aditional Paid-in -Capital(21000*(12-11)) 21000

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