Question

On December​ 2, 2018,​ Eshares, Inc. purchases land. In payment for the​ land, Eshares, Inc. issues 6 comma 000shares of common stock with $ 10par value. The land has been appraised at a market value of $ 480 comma 000.Which of the following is included in the journal entry to record this​ transaction?

a. debit Cash $500,000
b. credit Common Stock-$10.00 Par Value for $100.000 and credit Paid-In Capital in Excess of Par-Common $400000
c. $1000 Par Value for S100 000 and debit Paid-In Capital in Excess of Par debit omm on Stock -Common $400,000
d. credit Common Stock--$10 00 Par Value for $500,000 Click to select your answer

Answer 1

Credit Common Stock $ 10 Par Value for $ 60,000 and Credit Paid-In Capital in Excess of Par-Common $ 420, 000

Step-by-step explanation:

Since we were told that On December​ 2, 2018,​ Eshares, Inc. purchases a land in which Eshares issues 6 ,000 shares of common stock with $ 10par value and the land was appraised at a market value of $ 480,000 this means the Journal entry will be recorded as:

Credit Common Stock $ 10 Par Value for $ 60,000

Credit Paid-In Capital in Excess of Par-Common $ 420, 000

Calculated as:

Common stock = 6,000 shares x $10 = $60,000

Paid-in Excess of par = $480,000 - $60,000

= $420,000