Question

A corporation issued 5,400 shares of $10 par value common stock in exchange for some land with a market value of $78,000. the entry to record this exchange is:

Answer 1

To record the issuance of 5,400 shares for land, debit Land for $78,000, credit Common Stock for $54,000, and credit Additional Paid-In Capital for $24,000.

Step-by-step explanation:

The question involves a corporate transaction where a company is issuing common stock in exchange for land. In accounting, such a transaction requires journal entries that reflect the exchange of assets. Given that 5,400 shares of stock with a $10 par value each are issued for land valued at $78,000, the entry on the corporation's books would be to debit (increase) the Land account for $78,000, and credit (increase) the Common Stock account for the par value of the shares, which is 5,400 shares times $10 per share, totaling $54,000. The difference between the land's market value and the par value of the shares, which is $78,000 - $54,000 = $24,000, is recognized in the Additional Paid-In Capital account to balance the transaction. Therefore, the journal entry would be:

• Debit Land $78,000
• Credit Common Stock $54,000
• Credit Additional Paid-In Capital $24,000

Answer 2

To record this transaction, the journal entry is

Debit:
Land $78000

Credit
Common Stock $54,000
Paid in Capital in Excess Par Value Common Stock $24,000

The paid in capital means that is the excess received from the shareholders over the par value (or the stated value) of the stocks issued.