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This is an intermediate accounting question about Stockholder's Equity. (Chp15) On January 31, 2016, Leia transferred...

  1. This is an intermediate accounting question about Stockholder's Equity. (Chp15)
  2. On January 31, 2016, Leia transferred to its stockholders some of its equity investments. As of 01-31-16, the investments had a carrying value of $600,000 and a fair market value of $586,000. On March 1, Leia distributed the equity securities to stockholders of record as of February 20, 2016. Prepare the entries Leia should make on:
  3. January 31, 2016.
  4. February 20, 2016.
  5. March 1, 2016.

Homework Answers

Answer #1

SOLUTION

Date Accounts titles and Explanation Debit ($) Credit ($)
January 31, 2016 Common stock holders A/c 586,000
Additional capital A/c 14,000
Stock account (Equity inv.) 600,000
(Being stock transferred to common stock holders)
February 20, 2016 Stock holders A/c 586,000
Common stock holders A/c 586,000
(Being stock has been transferred to individual stock holders)
March 1, 2016 Cash A/c 586,000
  Stock holders A/c 586,000
(Being stock distributed to individual stock holders)
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