Exercise 11-6 As an auditor for the CPA firm of Hinkson and Calvert, you encount
ID: 2530589 • Letter: E
Question
Exercise 11-6
As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients.
1. LR Corporation is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,500 shares of its $19 par value common stock. The owners’ asking price for the land was $120,500, and the fair value of the land was $121,000.
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 20,500 shares of its $8 par value stock. At the time of the exchange, the land was advertised for sale at $270,500. The stock was selling at $9 per share. P
repare 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. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
list of accounts:
Accounts Payable
Accounts Receivable
Accumulated Depreciation-Buildings
Accumulated Depreciation-Equipment
Allowance for Doubtful Accounts
Bad Debt Expense
Buildings
Cash
Cash Dividends
Common Stock
Common Stock Dividends Distributable
Cost of Goods Sold
Depreciation Expense
Dividends Payable
Equipment
Income Summary
Income Tax Expense
Income Tax Payable
Interest Expense
Interest Payable
Inventory
Land
No Entry
Operating Expenses
Organization Expense
Other Operating Expenses
Paid-in Capital from Treasury Stock
Paid-in Capital in Excess of Par-Common Stock
Paid-in Capital in Excess of Par-Preferred Stock
Paid-in Capital in Excess of Stated Value-Common Stock
Patents
Preferred Stock
Professional Fees
Retained Earnings
Salaries and Wages Expense
Salaries and Wages Payable
Sales Revenue
Service Revenue
Stock Dividends
Supplies
Supplies Expense
Treasury Stock
Unearned Service Revenue
Explanation / Answer
1.Journal entry in LR Corporation
If Land is acquired by Fair Market Value entry is
Date Account Name Debit Credit
Dec 5th Land $ 121,000
Common Stock $ 66,500
Paid in capital in excess of par common stock $ 54,500
2.Journal entry in LR Corporation
Date Account Name Debit Credit
June 1st Land $ 270,500
Common Stock $ 164,000
Paid in capital in excess of par common stock $ 106,500
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