Tyrol Company creates a subsidiary, Venice Company. Tyrol transfers cash of $50,000, land with both a cost and book value of $175,000, and a building with a cost of $150,000 and a book value of $100,000 to Venice, in exchange for all 500,000 shares of Venice's $1 par common stock. Tyrol's journal entry to record the transfer would include:

Question

Business

Izaiah Lynch

26 July, 00:23

Tyrol Company creates a subsidiary, Venice Company. Tyrol transfers cash of $50,000, land with both a cost and book value of $175,000, and a building with a cost of $150,000 and a book value of $100,000 to Venice, in exchange for all 500,000 shares of Venice's $1 par common stock. Tyrol's journal entry to record the transfer would include:

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April Arias · Answer 1

The journal entry is provided below:

Explanation:

The journal entry which is to be recorded for transfer is as:

Common Stock A/c ... Dr $500,000

Land A/c ... Cr $175,000

Building A/c ... Cr $150,000

Cash A/c ... Cr $50,000

Paid in Capital A/c ... Cr $125,000

Working Note:

Common Stock A/c = Number of Shares * Rate per share

= 500,000 * $1

= $500,000

Paid in Capital A/c = Common stock - (Land + Building + Cash)

= $500,000 - ($175,000 + $150,000 + $50,000)

= $500,000 - $375,000

= $125,000

Note: As the options are missing, so providing the journal entry.