Question

Identify the specific effects (account name, dollar amount, financial statement impact) on the listed balance sheet components. Indicate increases, decreases, and no effects on particular components.

Transaction	Assets	Liabilities	Equity: Contributed Capital	Equity: Retained Earnings
A part of an incorporation agreement, a consultant was retained at an agreed-upon fee of $80,000 to provide a marketing plan for the first year of business. The plan benefited the first year only. The consultant felt the company had an excellent opportunity for success. So the consultant waived the normal $80,000 consulting fee in exchange for 1,000 shares of the company's $1 par value common stock.
A company acquired a tract of undeveloped land in exchange for 9,000 shares of $1 par value common stock. The land's market value was not easily determinable, but the common stock sold on the NYSE for $21 per share on the transaction date.

Answer 1

transaction	assets	liabilities	equity: contributed capital	equity : retained earnings
issuing shares to consultant	NE	NE	Increase: share capital ($1*1,000)=>$1,000 Increase:addtional paid in capital ($79*1,000)=>$79,000	Decrease :retained earnings ($80,000)
purchase of land	increase:$189,000 ($21*9,000)	NE	increase :share capital ($1*9,000)=>$9,000. additional paid in capital (9,000*20)=>$180,000	NE