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5 March, 11:36

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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  1. 5 March, 14:00
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    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.
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