Question

Knight Corp. obtained land by issuing 3,000 shares of its $10 par value common stock. The land was recently appraised at $72,000. The common stock is actively traded at $25 per share. When recording the acquisition of the land, what amounts will be recorded in the Land and Common Stock accounts?

Answer 1

Answer: See explanation

Step-by-step explanation:

From the question, we are informed that Knight Corp. obtained land by issuing 3,000 shares of its $10 par value common stock and that the land was recently appraised at $72,000 while the common stock is actively traded at $25 per share.

When recording the acquisition of the land, what amounts will be recorded in the Land and Common Stock accounts goes thus:

Debit: Land 3000 × $25 = $75000

Credit: Common stock = 3000 × $10 = $30,000

Therefore, the amount that will be recorded in the Land is $75000 and Common Stock accounts is $30000