(Learning Objective 2: Issue stock to finance the purchase of assets) This short exercise demonstrates the similarity and the difference between two ways to acquire plant assets.Case A – Issue stock and buy the assets in separate transactions:Wolford Company issued 12,000 shares of its $35 par common stock for cash of $950,000. In aseparate transaction, Wolford used the cash to purchase a building for $560,000 and equipment for$390,000. Journalize the two transactions.Case B – Issue stock to acquire the assets in a single transaction:Wolford Company issued 12,000 shares of its $35 par common stock to acquire a building witha market value of $560,000 and equipment with a market value of $390,000. Journalize thetransaction.Compare the balances in all the accounts after making both sets of entries. Are the accountbalances the same or different?
(Learning Objective 2: Issue stock to finance the purchase of assets) This short exercise demonstrates the similarity and the difference between two ways to acquire plant assets.
Case A – Issue stock and buy the assets in separate transactions:
Wolford Company issued 12,000 shares of its $35 par common stock for cash of $950,000. In a
separate transaction, Wolford used the cash to purchase a building for $560,000 and equipment for
$390,000. Journalize the two transactions.
Case B – Issue stock to acquire the assets in a single transaction:
Wolford Company issued 12,000 shares of its $35 par common stock to acquire a building with
a market value of $560,000 and equipment with a market value of $390,000. Journalize the
transaction.
Compare the balances in all the accounts after making both sets of entries. Are the account
balances the same or different?
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