Question

Barton Company is a publicly held corporation whose $1 par value stock is actively traded at $32 per share. The company issued 3,000 shares of stock to acquire land recently advertised at $100,000. When recording this transaction, Barton Company will:____________

a) debit Land for $100,000.
b) credit Common Stock for $96,000.
c) credit Paid-In Capital in Excess of Par for $98,000.
d) debit Land for $96,000.

Answer 1

d) debit Land for $96,000.

Step-by-step explanation:

Since the par value of the stock is $1, the value of common stock will be 1* 3,000= $3,000.

The stock is actively trading for $32 per share, the value of the shares used to purchase the land is 32* 3000= $96,000

The excess of paid in capital will be 96,000 - 3,000= $93,000

The journal entry that will be raised will include a debit to land of the total market value of the shares (that is $96,000).

A credit of $3,000 will be passed to common stock, while another credit of $93,000 will be passed to paid-in capital in excess.