The journal entry for the acquired plant assets of Doonesbury Company would be:
Debit: Land $300,000
Debit: Buildings $900,000
Debit: Equipment $600,000
Credit: Common Stock $1,230,000
Credit: Additional Paid-in Capital $570,000
How to journalize the entries ?
To record the acquisition of the plant assets of Doonesbury Company by Splish Company, we need to make journal entries on the books of Splish Company.
This transaction is essentially a non-monetary exchange of assets, where Splish Company is giving 12,300 shares of its $100 par value common stock in exchange for the plant assets of Doonesbury Company with an appraised value of $1,800,000.
The Common Stock account is credited for the par value of the shares issued, and the difference goes to Additional Paid-in Capital.
The full question is:
Presented below is information related to Splish Company. 1. On July 6, Splish Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is:
Land Buildings Equipment Total $300,000 900,000 600,000 $1,800,000
Splish Company gave 12,300 shares of its $100 par value common stock in exchange.
Prepare entries on the books of Splish Company for this transaction