Question: This short exercise demonstrates the similarity and the difference between two ways to acquire plant assets. Case A Issue stock and buy the assets

This short exercise demonstrates the similarity and the difference between two ways to acquire plant assets.

Case A – Issue stock and buy the assets in separate transactions:

Wolford Company issued 12,000 shares of its $35 par common stock for cash of $950,000. In a separate transaction, Wolford used the cash to purchase a building for $560,000 and equipment for $390,000. Journalize the two transactions.

Case B – Issue stock to acquire the assets in a single transaction:

Wolford Company issued 12,000 shares of its $35 par common stock to acquire a building with a market value of $560,000 and equipment with a market value of $390,000. Journalize the transaction.

Compare the balances in all the accounts after making both sets of entries. Are the account balances the same or different?

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