The following transactions were recorded on the books of Baxter Company during the current year. a. Issued

Question:

The following transactions were recorded on the books of Baxter Company during the current year.
a. Issued a “small” common stock dividend of 400 shares. The par value is $10 per share, and the relevant market price was $20 per share.
b. Exchanged equipment with a cost of $10,000 and a book value of $3,800 for land valued at $12,000, paying an additional $8,500 in cash.

c. Converted preferred stock ($100 par) with a total par value of $20,000 and a book value of $22,800 to 1,500 shares of its $10 par common stock. The book value method was used to account for the conversion.
d. Recorded a loss of $4,200 as a result of retiring bonds payable with a face value of $30,000 and a related premium of $5,000 by paying $39,200.
e. Recorded an ordinary gain of $6,000 as a result of a sale of a building costing $100,000 and having an associated book value of $70,000. Cash received from the sale totaled $76,000.
f. Acquired equipment by entering into a capital lease. The lease required payments of $5,000 in advance; the present value of the lease payments (before the initial payment) was $34,000.

Required:
For each of the preceding items, discuss if and illustrate how the transaction would be recorded on the spreadsheet to support the statement of cash flows. Use a journal entry format for your illustrations.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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