0000 C Spire 10:47 ANM 63% ezto.mheducation.com 2.50 points Hammond Corporation

Question

0000 C Spire 10:47 ANM 63% ezto.mheducation.com 2.50 points Hammond Corporation was formed when it issued shares of common stock to two of its shareholders. Hammond issued 8,500 shares of $9 par common stock to P. Coldwell in exchange for $93,500 cash (the issue price was $11 per share). Hammond also issued 2,800 shares of stock to M. Roberts in exchange for a one- year-old delivery van on the same day. Roberts had originally paid $36,960 for the van. Required What was the market value of the delivery van on the date of the stock issue? Show the effect of the two stock issues on Hammond'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), an investing activity (IA), or a financing activity (FA). Use NA to indicate that an element was not affected by the event Show effect on the accounting equation in the order provided in the question. (Enter any decreases to account balances and cash outflows with a minus sign.) Expense Stock Capitaln ReferencesBook & Resources Dffoulty 2 08-04E

Explanation / Answer

1 Market Value of the Van Type Shares Rate Amount Par Value 2800 9        25,200 Premium 2800 2           5,600 Market Value of Van        30,800 Balance Sheet Income Statement Statement of Cash Flow Event Assets Shareholders Equity Revenue Expenses Net Income Cash Van Common Stock Paid-in- Capital in excess Revenue Expenses Net income 1        93,500        76,500                  17,000 +93500 2         30,800        25,200                     5,600 +30800 -30800 Working Note Issue of Shares Type Shares Rate Amount Par Value 8500 9        76,500 Premium 8500 2        17,000 Issue Price        93,500

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