Question

Date Savel: December 3, 2019 Time Sayed: 8:31 PM Solve the following problems and show your work. (100 marks) Section 1 (20 marks) Answer the following two independent cases. Case One (15 marks) On January 2, 2019, Pioneer Company created a subsidiary to enter into a new line of business. Pioneer transferred the following assets and accounts payable to Shephard Company in exchange for 100,000 shares of S6 par value stock of Shephard: Items Accounts Receivable Inventory Cost $510,000 460,000 Equipment Book Value $400,000 460,000 90,000 120,000 Accounts Payable 140,000 120,000 Required: Use the space provided on page 3 to: a. Give the journal entry in which Pioneer Company recorded the transfer of assets and accounts payable to Shephard Company. b. Give the journal entry in which Shephard Company recorded the receipt of assets and accounts payable from Pioneer Company.

Answer 1

Credit Debit 120000 600000 230000 Account title & explanation Accounts Payable Shephard Company Cash or Capital Reserve Accounts Receivable Inventory Equipment (To record transfer of assets and liabilities to Shephard Company) 400000 460000 90000 47 48 49 50 b) 400000 460000 90000 Accounts Receivable Inventory Equipment Accounts Payable Shephard Company Cash or Capital Reserve (To record transfer of assets and liabilities to Shephard Company) 120000 600000 230000 Note; As the total amount of assets transferred is higher than the liabilities difference is either transferred to cash or reserve.