This short exercise demonstrates the similarity and the difference between two ways to acquire plant assets. Compare
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Compare the balances in all the accounts after making both sets of entries. Are the account balances similar ordifferent?
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Case A-Issue stock and buy the assets in separate transactions: Hampton, Inc., issued 17,000 shares of its $25 par common stock for cash of $850,000. In a separate transaction, Hampton used the cash to purchase a building for $590,000 and equipment for $260,000. Journalize the two transactions. Case B Issue stock to acquire the assets in a single transaction Hampton, Inc., issued 17,000 shares of its $25 par common stock to acquire a building valued at $590,000 and equipment worth $260,000. Journalize this transaction.
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Related Book For
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
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