Question

On March 1, Parnell Industries purchased 2 million Platinum Gems, Inc. common shares for $124 million in cash. Parnell also paid $2 million in brokerage fees and commissions to complete the purchase. These shares represent 10% of the outstanding common stock of Platinum.

Required:
Prepare the appropriate journal entry to record this transaction.

Answer 1

Answer and Explanation:

The journal entry is shown below:

Common Stock $124 million

          To Cash $124 million  

(Being Stock of platinum gems purchased is recorded)

Here common stock is debited as it decreased the equity and the cash is credited as it also decreased the assets

The same should be relevant