Exercise 10-12 Below are transactions related to Flounder Company. Prepare journ
ID: 2580803 • Letter: E
Question
Exercise 10-12
Below are transactions related to Flounder Company.
Prepare journal entries on the books of Flounder Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
No.
Account Titles and Explanation
Debit
Credit
(a)
(b)
(c)
(a) The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $79,910. (b) 13,000 shares of common stock with a par value of $55 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $799,100, of which $191,510 has been allocated to land and $607,590 to buildings. The stock of Flounder Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $72 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $64 per share. (c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.Explanation / Answer
Answer :- Journal entries
Land A/c Dr.
To Contribution Revenue A/c
79910
79910
Building A/c Dr.
Land A/c Dr.
To Common stock A/c (13000 * 55)
To Additional paid-in-capital A/c
607590
191510
715000
84100
Machinery A/c Dr. (12030 + 14600 + 12448)
To Direct Material A/c
To Direct Labor A/c
To Factory overhead A/c
39078
12030
14600
12448
(b). Additional paid-in-capital A/c = (607590 + 191510) - 715000 = $ 84100.
(c). Factory overhead = Additional overhead + Factory supplied used + Applied fixed overhead.
= 2793 + 895 + 60 % of 14600
= 2793 + 895 + 8760
= $ 12448.
Serial number Account Titles and Explanation Debit ($) Credit ($) a).Land A/c Dr.
To Contribution Revenue A/c
79910
79910
b).Building A/c Dr.
Land A/c Dr.
To Common stock A/c (13000 * 55)
To Additional paid-in-capital A/c
607590
191510
715000
84100
c).Machinery A/c Dr. (12030 + 14600 + 12448)
To Direct Material A/c
To Direct Labor A/c
To Factory overhead A/c
39078
12030
14600
12448
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