Piton Company was established on January 1, 2019. Along with other assets, it immediately purchased land for $90,000, and a building $125,000. On January 1, 2022, Piton transferred these assets, cash of $45,000, and inventory costing $32,000 to a newly created subsidiary, Sparrow Company, in exchange for 40,000 shares of Sparrows $5 par value stock. Piton uses straight line depreciation and useful life of 25 years for the building, with no estimated residual values.

Required:

a. Give the journal entry that Piton recorded for the transfer of assets and liabilities to Sparrow

b. Give the journal entry that Sparrow recorded for the receipt of assets and liabilities from Piton