Question

O'Malley, Inc. issued 100 comma 000 shares of common stock in exchange for manufacturing equipment. The equipment has a fair value of $ 1 comma 430 comma 000. The stock has a par value of $ 0.02 per share. The journal entry to record this transaction includes a

Answer 1

Dr Manufacturing equipment $1,430,0000

Cr Common stock $2,000

Cr Paid-in capital in excess of par value $1,428,000

Step-by-step explanation:

The equipment account would be debited with $1,430,000 as an increase in assets.

The common stock account would be credited with the par value of 100,000 stocks which is $2,000($0.02*100,000) while balance of $1,428,000($1,430,000-$2000) is credited to paid-in capital in excess pf par value