enovo Chapter 11 Homework 120% Financial Accounting I: FALL 2017, AC ACCOUNTING
ID: 2588060 • Letter: E
Question
enovo Chapter 11 Homework 120% Financial Accounting I: FALL 2017, AC ACCOUNTING Chapter 11 Homework Question 5 (of 9 5. 250 points Hammond Corporation was formed when it issued shares of common stock to two of its shareholders Hammond issued 7,000 shares of $11 par common stock to P Coldwell in exchange for $91,000 cash (the issue price was $13 per share) Hammond also issued 2,900 shares of stock to M. Roberts in exchange for a one-year-old delivery van on the same day Roberts had originally paid $45,240 for the van Required a. What was the market value of the delivery van on the date of the stock issue? b. Show the effect of the two stock issues on Hammond's books in a horizontal statements model like following one In the Cash Flow columnExplanation / Answer
a)When an asset is exchanged other than for cash ,the fair market value of asset equals to market value of shares exchanged or asset exchanged .
Market value of van =Shares issued *price per shares
= 2900*13
= $ 37700
b)
Horizontal statement Model Event Balancesheet Income statement Asset Stockholders equity statement of cash flow cash Van common stock paid in capital Revenue expense Net Income 1 +91000 NA 77000 [7000*11] 14000 [7000*(13-11)] NA NA NA +91000 Financing activity 2 NA +37700 31900 [2900*11] 5800 NA NA NA NA [as no cash is inflowed]Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.