Question

Prepare the journal entry to record Autumn Company’s issuance of 74,000 shares of no-par value common stock assuming the shares: Sell for $28 cash per share. Are exchanged for land valued at $2,072,000.

Answer 1

Journal entry:

Debit land Account with $2,072,000

Credit common stock Account with $2,072,000

(Being sale of 74,000 shares in exchange for land valued at the selling price of shares)

Step-by-step explanation:

Autumn Company

74,000 shares at $28 = $2,072,000

Instead of being paid cash for the sale of shares, land was the consideration for the sale

Journal entry:

Debit land Account with $2,072,000

Credit common stock Account with $2,072,000

(Being sale of 74,000 shares in exchange for land valued at the selling price of shares)

Answer 2

Dr. Land $2,072,000

Cr. Common stock $2,072,000

Step-by-step explanation:

As company has received a land against the share issuance. The exchange value will be the value of transaction rather the given value of share. Shares issued in exchange of land is recorded using the exchange value of the Land.

Exchange value of Land = $2,072,000

Number of Shares = 74,000

Share price= $28

No par value value share are recorded in as the common stock there is no excess of par value.