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Lester Company transferred the following assets to a newly created subsidiary, Mumby Corporation, in exchange for 40,000 shares of its $3 par value stock: Cost

  1. Lester Company transferred the following assets to a newly created subsidiary, Mumby Corporation, in exchange for 40,000 shares of its $3 par value stock:

Cost

Book Value

Cash

$ 40,000

$ 40,000

Accounts Receivable

75,000

68,000

Inventory

50,000

50,000

Land

35,000

35,000

Building

160,000

125,000

Equipment

240,000

180,000

  1. Give the journal entry in which Lester recorded the transfer of assets to Mumby Corporation. (solution in Microsoft word)

  1. Give the journal entry in which Mumby recorded the receipt of assets and issuance of common stock to Lester. ( solution in Microsoft word )

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