Balance Sheet Totals of Parent Company
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 4,000 shares of $12 par value common stock:
Amount Reported
Before Transfer
After Transfer
Cash
$ 40,000
$ 25,000
Accounts Receivable
65,000
41,000
Inventory
30,000
21,000
Investment in Kline Company
66,000
Land
15,000
12,000
Depreciable Assets
$180,000
$115,000
Accumulated Depreciation
75,000
105,000
47,000
68,000
Total Assets
$255,000
$233,000
Accounts Payable
$ 18,000
Bonds Payable
80,000
Common Stock
60,000
Retained Earnings
Total Liabilities and Equities
Required
a. Give the journal entry that Foster recorded when it transferred its assets and accounts payable to Kline.
b. Give the journal entry that Kline recorded upon receipt of the assets and accounts payable from Foster.
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