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On November 23, Elder Lift Corporation, a wholesaler of hydraulic lifts, acquired land in ex- change for 7,800 shares of $5 par common stock with a current market price of $28. Jour- nalize the entry to record the transaction

User Amanpreet
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Answer:

To journalize the entry to record the transaction, you would first need to determine the total value of the land that was acquired. Since the market price of the stock is $28 per share, the total value of the 7,800 shares would be 7,800 * $28 = $216,400.

Next, you would need to determine the cost of the land, which is the number of shares times the par value of the stock. In this case, the cost of the land would be 7,800 * $5 = $39,000.

With this information, you can now journalize the entry to record the transaction. The entry would consist of two parts: a debit to the land account for the cost of the land, and a credit to the common stock account for the market value of the stock. The journal entry would look like this:

Debit Credit

Land $39,000

Common Stock $216,400

The debit to the land account reflects the cost of the land, which is the number of shares times the par value of the stock. The credit to the common stock account reflects the market value of the stock that was received in exchange for the land. This credit increases the company's equity and reflects the value of the assets that were acquired in the transaction.

It's important to note that this journal entry assumes that the market value of the stock is equal to or greater than the cost of the land. If the market value of the stock is less than the cost of the land, the journal entry would be different, and the difference would be recorded as a loss on the transaction.

Step-by-step explanation:

User Alexandru Marina
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