P1-24

Pab Corporation decided to establish Sollon Company as a wholly-owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 30,000 shares of $6 par value common stock. The following information is provided on the assets and accounts payable transferred:

1.) Give the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon.

2.) Give the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.

Cost Book Value Cash Accounts Receivable Inventory Land Buildings & Equipment Accounts Payable $ 30,000 45,000 60,000 20,000 300,000 10,000 $ 30,000 40,000 60,000 20,000 260,000 10,000