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

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

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.

Case A - Issue stock and buy the assets in separate transactions O'Dell Company issued 10,000 shares of its $40 par common stock for cash of $600,000. In a separate transaction, O'Dell used the cash to purchase a building for $510,000 and equipment for $90,000. Journalize the two transactions Case B Issue stock to acquire the assets in a single transaction O'Dell Company issued 10,000 shares of its $40 par common stock to acquire a building with a market value of $510,000 and equipment with a market value of $90,000. Journalize this transaction Journal Entry Accounts Debit Credit Case A Record the purchase of the building and equipment. Journal Entry Accounts Debit Credit Case B - Record the issuance of the common stock to acquire assets. Journal Entry Accounts Debit Credit Journal Entry Accounts Debit Credit Accounts Receivable Building Cash Case A - Record Common Stock Equipment Inventory Operating Expenses Paid-in Capital in Excess of Par-Common Paid-in Capital in Excess of Par-Preferred Preferred Stock Sales Revenue Debit Credit Case B Record the issuance of the common stock to acquire assets. Journal Entry Accounts Debit Credit 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