Property and Goodwill ofthe business of John Doe,transferred to this company asper resolution of the boardof directors, Dec. 21st, 1908.
Goodwill$28,369.70
Cash2,264.00
Accounts receivable4,650.50
Machinery9,000.00
Manufactured goods2,100.00
Material and supplies3,780.00
Furniture and fixtures700.00
Accounts payable $864.20
Capital stock50,000.00

One half of the capital stock is thus accounted for. The balance is to be subscribed, and when subscribed the entries will be as explained in Art. 26, depending upon whether subscriptions are paid in full or in installments.

28. When Stock is Issued in Payment of Property and a Part of the Stock is to be Donated to the Company. John Doe owns a valuable patent on an automobile attachment and desires to secure capital to carry on its manufacture. He interests Richard Roe and Henry Snow, who agree to assist him to form the National Manufacturing Company to take over his patent and manufacture the attachment. The company is incorporated with an authorized capitalization of $150,000. Roe and Snow agree that Doe shall receive $100,000 full paid stock for his patent, and to subscribe $25,000 each, payable in cash to be used for the purchase of the necessary machinery. John Doe, in turn, agrees to donate $50,000 of his stock to provide working capital. The entries are:

Patents$100,000
Capital stock $100,000
Full paid stock issued to John Doe to pay for patents transferred to the Company by bill of sale dated Dec. 2, 1908.
Subscriptions $50,000
Capital stock $50,000
Subscriptions to capital stock as follows:—
Richard Roe$25,000
Henry Snow25,000
————
Treasury stock 50,000
Working capital 50,000
Full paid stock donated by John Doe to provide working capital.
When subscriptions are paid:—
Cash50,000
Subscriptions 50,000

It is decided to sell $30,000 of the treasury stock at 50% of its face value, and subscriptions are received for this amount.

Subscription to treasury stock30,000
Treasury stock 30,000

Subscription account is debited and treasury stock credited for the full amount since this is the amount of full paid stock to be issued, regardless of the price at which it is sold.

When this stock is paid for, the entry in the cash book on the debit side is:

Subscriptions to treasury stock15,000

This leaves a debit balance of $15,000 in the account subscriptions to treasury stock, which represents a discount on the stock sold.