Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cash Inventory. Land Buildings. Equipment Accounts Payable Cost $ 38,000 89,000 61,000 174,000 99,000 45,000 Book Value $ 38,000 89,000 61,000 136,000 70,000 45,000 Fair Value $ 38,000 89,000 91,000 248,000 108,000 45,000 Required: a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cash Inventory. Land Buildings. Equipment Accounts Payable Cost $ 38,000 89,000 61,000 174,000 99,000 45,000 Book Value $ 38,000 89,000 61,000 136,000 70,000 45,000 Fair Value $ 38,000 89,000 91,000 248,000 108,000 45,000 Required: a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and
liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $7 par value common stock. The following information is
provided on the assets and accounts payable transferred:
Cash
Inventory
Land
Buildings
Equipment
Accounts Payable
Required A
Required:
a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon
b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Complete this question by entering your answers in the tabs below.
Required B
View transaction list
Cost
$ 38,000
89,000
61,000
174,000
99,000
45,000
A
Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Journal entry worksheet
Book Value
$ 38,000
89,000
61,000
136,000
70,000
45,000
Event
1
Note: Enter debits before credits.
Record the transfer of assets and accounts payable to Sollon.
Record entry
Fair Value
$ 38,000
89,000
91,000
248,000
108,000
45,000
General Journal
Clear entry
Debit
Credit
View general journal
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