Help with an accounting problem?!?
Question:
a) Mr. A, 50% stockholder and namesake owner is retiring from the business. He and his brother, Mr. P., agreed that a fair price for the buyout is $140,000. Each brother owns 20,000 shares of stock. The company will buy Pat's shares into treasury stock, paying him out of company funds.
b) The company does not have $140,000 in cash, and does not want to take on additional debt. For these reasons, and the positive trend in the real estate market, the company has decided to sell its land and building to a real estate firm. The selling price is $200,000. The company is not moving. It will continue to do business opt of its current location and rent space out from the new owners in 2008 and beyond. The store fixtures are not being sold.
c.) The company will use the remaining $60,000 to pay off its notes payable balance.
d.) Mr. M, an owner of a vacant retail space in the area, wants to become part owner of the company and will contribute his small storefront, which the company will use to open a second location in 2008. The building has a book value on Mr. M's books of $35,000, and an appraised market value of $40,000. In exchange for the building, Mr. M will receive 5,000 shares of common stock, representing 20% ownership in the company. (assume that the 5,000 shares are distributed out of treasury stock.)
d.) Repeat d, assuming that the 5,000 shares are distributed out of authorized, unissued stock.
Answer:
You can refer to the other answer I gave you on a similar question you asked previously?
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