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

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 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), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.

c. Prepare the journal entries to record thesetransactions.

  • CreatedOctober 12, 2013
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