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

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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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Part 1

Journalize the transactions for cases A and B. (Record debits first, then credits. Exclude explanations from any journal entries.)

Let's begin with case A - Record the issuance of the common stock.

Journal Entry
	Accounts	Debit	Credit

Part 2

Case A - Record the purchase of the building and equipment.

Journal Entry
	Accounts	Debit	Credit

Part 3

Case B - Record the issuance of the common stock to acquire assets.

Journal Entry
	Accounts	Debit	Credit

Part 4

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

The account balances are

different

the same

.

The account balances are.

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

AshleyAshley

Company issued

17 comma 00017,000

shares of its

$ 35$35

par common stock for cash of

$ 650 comma 000$650,000.

In a separate transaction,

AshleyAshley

used the cash to purchase a building for

$ 510 comma 000$510,000

and equipment for

$ 140 comma 000$140,000.

Journalize the two transactions.

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

AshleyAshley

Company issued

17 comma 00017,000

shares of its

$ 35$35

par common stock to acquire a building with a market value of

$ 510 comma 000$510,000

and equipment with a market value of

$ 140 comma 000$140,000.

Journalize this transaction.

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