Question

Phoster Corporation established Skine Company as a wholly owned   subsidiary. Phoster reported the following balance sheet amounts immediately   before and after it transferred assets and accounts payable to Skine Company   in exchange for 4,700 shares of $11 par value common stock:
	Amount Reported
	Before Transfer			After Transfer
Assets
Cash		58,000			23,000
Accounts Receivable		84,000			34,000
Inventory		48,000			13,000
Investment in Skine Company					142,000
Land		18,000			15,000
Depreciable Assets	192,000			113,000
Accumulated Depreciation	77,000	115,000		41,000	72,000
Total Assets		323,000			299,000
Liabilities and Equities
Accounts Payable		34,000			10,000
Bonds Payable		76,000			76,000
Common Stock		53,000			53,000
Retained Earnings		160,000			160,000
Total Liabilities and   Equities		323,000			299,000
Required:
a.   & b. Prepare the journal entry that Phoster recorded when it transferred   the assets to Skine, and the entry that Skine recorded for the receipt of   assets and issuance of common stock to Phoster. (If   no entry is required for a transaction/event, select "No journal entry   required" in the first account field.)

Answer 1

Journal entries
Particulars	Debit	Credit
Investment in   skine company common stock	142,000
accumulated   depreciation	36,000
accounts   payable	24,000
cash		35,000
accounts   receivable		50,000
inventory		35,000
land		3,000
Depreciable   assets		79,000
cash	35,000
accounts   receivable	50,000
inventory	35,000
land	3,000
Depreciable   assets	79,000
accumulated   depreciation		36,000
accounts   payable		24,000
Common stock   (4700*11)		51,700
additional   paid in capital (142000-41700)		90300