On April 21 Killarny Enterprises acquired a large tract of
On April 21, Killarny Enterprises acquired a large tract of land from McSwain Corporation. Killarny issued 1,400 shares of its $1 par value common stock to McSwain in exchange for the land.
Required:
(a) Prepare the journal entry to record this transaction by Killarny Enterprises, if the company’s stock is not publicly traded and the land has an appraised value of $110,000.
(b) Assume that on April 20, the Killarny stock traded on the New York Stock Exchange for $75 per share. The land has an appraised value of $110,000.Prepare the appropriate journal entry to record this exchange transaction by Killarny Enterprises.
(c) Suppose, instead, that Killarny sold 1,400 shares of stock on April 20 for $80 cash per share. The company then acquired the land from McSwain Corporation on April 21 for its appraised value. Prepare the journal entries for these two transactions by Killarny Enterprises.
(d) Determine the differences between the financial statement results in parts (a), (b), and (c). Explain why these differences occurred.
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