Horace Company had the following transactions during 2017, its first year of business. a. Issued 5,000 shares
Question:
Horace Company had the following transactions during 2017, its first year of business.
a. Issued 5,000 shares of $5 par common stock for cash at $15 per share.
b. Issued 7,000 shares of common stock on May 1 to acquire a factory building from Barkley Company. Barkley had acquired the building in 2013 at a price of $150,000. Horace estimated that the building was worth $175,000 on May 1, 2017.
c. Issued 2,000 shares of stock on June 1 to acquire a patent. The accountant has been unable to estimate the value of the patent but has determined that Horace's common stock was selling at $25 per share on June 1.
Required
1. Identify and analyze the effect of each transaction.
2. Determine the balance sheet amounts for common stock and additional paid-in capital.
Common StockCommon 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... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
1 a The effect of the issuance of the common stock can be identified and analyzed as ...View the full answer
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1337491471
10th edition
Authors: Gary A. Porter, Curtis L. Norton
