Question

Foster Corporation established Kline Company as a wholly owned subsidiary. Foster reported the following balance sheet...

Foster Corporation established Kline Company as a wholly owned subsidiary. Foster reported the following balance sheet amounts immediately before and after it transferred assets and accounts payable to Kline Company in exchange for 4,600 shares of $12 par value common stock:
        Amount Reported
  
Before Transfer After Transfer
  Assets
  Cash $ 52,000 $ 20,000
  Accounts Receivable 80,000 35,000
  Inventory 46,000 15,000
  Investment in Kline Company 131,000
  Land 17,000 14,000
  Depreciable Assets $ 184,000 $ 114,000
  Accumulated Depreciation 80,000 104,000 46,000 68,000
  
  Total Assets $ 299,000 $ 283,000
  
  Liabilities and Equities
  Accounts Payable $ 31,000 $ 15,000
  Bonds Payable 76,000 76,000
  Common Stock 54,000 54,000
  Retained Earnings 138,000 138,000
  
  Total Liabilities and Equities $ 299,000 $ 283,000
  
a.&b.

Prepare the journal entry that Foster recorded when it transferred the assets to Kline, and the entry that Kline recorded for the receipt of assets and issuance of common stock to Foster. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

(A) Record the transfer of assets and accounts payable by Foster Corporation to Kline Company.

(B) Record the receipt of assets and accounts payable by Kline Company from Foster Coproration.

Business   Accounting   
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Answer #1

a. Journal entry recorded by Foster corporation for transfer of assets and accounts payable to Kline Company.

b. Journal entry recorded by Kline Company for Receipt of assets and accounts payable from foster corporation.

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