Carroll Corporation was formed when it issued shares of common stock to two of its shareholders. Carroll

Question:

Carroll Corporation was formed when it issued shares of common stock to two of its shareholders. Carroll issued 10,000 shares of $5 par common stock to R. Flowler in exchange for $80,000 cash (the issue price was $8 per share). Carroll also issued 3,500 shares of stock to P. Jones in exchange for a one-year-old delivery van on the same day. Jones had originally paid $39,000 for the van.

Required

a. What was the market value of the delivery van on the date of the stock issue?

b. Show the effect of the two stock issues on Carroll€™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), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.

Carroll Corporation was formed when it issued shares of common

c. Prepare the journal entries to record these transactions.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...