Question

Locust Corporation issued 36 comma 000 shares of ​$4 par value common stock in exchange for a building with a market value of $ 170 comma 000. Record the stock issuance.

Answer 1

Building a/c-------Dr $170000

Common stock a/c-------Cr $144000

Paid-in capital in excess of par value a/c------ Cr $26000

Step-by-step explanation:

Given: Share issued= 36000

Price per share= $4 par value.

Building market value= $170000.

Finding the value of common stock.

Value of common stock=
`Number\ of\ share\ issued* par\ value\ of\ common\ stock`

∴ Value of common stock=
`36000* 4= \$ 144000`

Excess of paid in capital with exchange of common stock=
`Building\ market\ value - value\ of\ common\ stock`

∴ Excess of paid in capital with exchange of common stock=
`\$ 170000-\$ 144000= \$ 26000`