Exercise 13-06

As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients.

1. Novak Corporation is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing5,000shares of its $19par value common stock. The owners' asking price for the land was $123,500, and the fair value of the land was $117,000.
2. Flounder Corporation is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing21,000shares of its $10par value stock. At the time of the exchange, the land was advertised for sale at $275,000. The stock was selling at $11per share.

Prepare the journal entries for each of the situations above.