As an auditor for the CPA firm of Gratis and Goode, you encounter the following

Question

As an auditor for the CPA firm of Gratis and Goode, you encounter the following situations in auditing different clients.

1.
JR Corporation is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,500 shares of its $9 par value common stock. The owners As an auditor for the CPA firm of Gratis and Goode, you encounter the following situations in auditing different clients.

1.
JR Corporation is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,500 shares of its $9 par value common stock. The owners 1.
JR Corporation is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,500 shares of its $9 par value common stock. The owners As an auditor for the CPA firm of Gratis and Goode, you encounter the following situations in auditing different clients.

Explanation / Answer

1.

Debit ...Cash $100,000
Credit ....Capital Stock $100,000 then,

Debit .........Land - $120,000
Credit ........Cash - $120,000

2.

Debit ...Cash $200,000
Credit...Capital Stock $200,000 then,

Debit .............Land - $250,000
Credit ...........Cash - $250,000


the stock trading at $12/share is a red herring. It doesn't matter what it's trading at on the market. The company only gets cash from the initial issuance of stock.

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