Reference no: EM132892123

Problem - Infrequent Transactions - The following transactions were recorded on the books of Baxter Company during the current year.

a. Issued a "small" common stock dividend of 400 shares. The par value is $10 per share, and the relevant market price was $20 per share.

b. Exchanged equipment with a cost of $10,000 and a book value of $3,800 for land valued at $12,000, paying an additional $8,500 in cash.

c. Converted preferred stock ($100 par) with a total par value of $20,000 and a book value of $22,800 to 1,500 shares of its $10 par common stock. The book value method was used to account for the conversion.

d. Recorded a loss of $4,200 as a result of retiring bonds payable with a face value of $30,000 and a related premium of $5,000 by paying $39,200.

e. Recorded an ordinary gain of $6,000 as a result of a sale of a building costing $100,000 and having an associated book value of $70,000. Cash received from the sale totaled $76,000.

f. Acquired equipment by entering into a capital lease. The lease required payments of $5,000 in advance; the present value of the lease payments (before the initial payment) was $34,000.

Required - For each of the preceding items, discuss if and illustrate how the transaction would be recorded on the spreadsheet to support the statement of cash flows. Use a journal entry format for your illustrations.