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Foster Corporation established Kline Company as a wholly owned subsidiary
Foster Corporation established Kline Company as a wholly owned subsidiary. Foster reported the balance sheet amounts immediately before and after it transferred assets and accounts payable to Kline Company in exchange for 4,000 shares of $12 par value common stock:
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Amount Reported |
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Before Transfer |
After Transfer |
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Cash |
$40,000 |
$25,000 |
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Accounts Receivable |
65,000 |
41,000 |
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Inventory |
30,000 |
21,000 |
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Investment in Kline Company |
66,000 |
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Land |
15,000 |
12,000 |
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Depreciable Assets |
$180,000 |
$115,000 |
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Accumulated Depreciation |
75,000 |
105,000 |
47,000 |
68,000 |
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Total Assets |
$255,000 |
$233,000 |
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Accounts Payable |
$40,000 |
$18,000 |
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Bonds Payable |
80,000 |
80,000 |
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Common Stock |
60,000 |
60,000 |
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Retained Earnings |
75,000 |
75,000 |
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Total Liabilities & Equities |
$255,000 |
$233,000 |
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- Give the journal entry that Foster recorded when it transferred its assets and accounts payable to Kline.
- Give the journal entry that Kline recorded upon receipt of the assets and accounts payable from Foster.
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