Question

Exchanged a land with an adjusted basis of 65,000 for 5,000 shares of corporation stock and 10,000 cash the corporation stock had a fmv of 80,000 on the date

Answer 1

Sr. No Particulars Debit Credit

Land $ 65000

Profit & Loss Account $ 25,000

Corporation Stock $ 80,000

Cash $ 10,000

Step-by-step explanation:

Recording of purchase of land for stock of $ 80,000 and cash $ 10,000 . As the value of land is $ 65,000 the loss is debited to the profit and loss account. the stock is recorded at the fair market value on the date.