Question

Exercise 11-4 Stock issuance for noncash assets LO P1 Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

Land $45,000

Building Dr, 85,000

To Common Stock $49,000 (7,000 shares × $7)

To Paid-in capital in excess of par-Common stock $81,000

(Being issuance of the stock in exchange for the land and building is recorded)

Here we debited the land and building as it increases the assets and we credited the common stock and paid in capital in excess of par-common stock as it also increases the liabilities.