What journal entry is recorded

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Reference no: EM1314281

Calculating Revenue Profit & Capital Profit and passing Journal Entry.

Bon Air, Inc., acquired 70 percent (2,800 shares) of the outstanding voting stock of Creedmoor Corporation on January 1, 2004, for $250,000 cash Creedmoor's net assets on that date totaled $230,000, but this balance included three accounts having fair values that differed from their book values:

	Book Value	Fair Value
Land ................................................................................................	$30,000	$ 40,000
Equipment (14-year life) ............................................................	50,000	118,000
Liabilities (10-year life) ...............................................................	(70,000)	(50,000)

As of December 31, 2007, the two companies report the following balances:

	Bon Air	Creedmoor
Revenues	$ (694,800)	$(250,000)
Operating expenses	630,000	180,000
Investment income	(44,200)	-0-
Net income	$ (109,000)	$ (70,000)
Retained earnings, 1/1/07	$ (760,000)	$(260,000)
Net income	(109,000)	(70,000)
Dividends paid	68,000	10,000
Retained earnings, 12/31/07	$ (801,000)	$(320,000)
Current assets	$ 72,000	$ 120,000
Investment in Creedmoor Corp	321,800	-0-
Land	241,000	50,000
Buildings (net)	289,000	200,000
Equipment (net)	165,200	40,000
Total assets	$ 1,089,000	$ 410,000
Liabilities	$ (180,000)	$ (50,000)
Common stock	(50,000)	(40,000)
Additional paid-in capital	(58,000)	-0-
Retained earnings, 12/31/07	(801,000)	(320,000)
Total liabilities and equities	$(1,089,000)	$(410,000)

If Bon Air sells 400 shares of this stock on December 31, 2007, for $60,000 cash, what journal entry is recorded?

Reference no: EM1314281

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