Question

Sudoku Company issues 17,000 shares of $8 par value common stock in exchange for land and a building. The land is valued at $230,000 and the building at $372,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.

Answer 1

Answer:

Debit Land for $230,000

Debit Building for $372,000

Credit Common Stock (w.1) for $136,000

Credit Paid in capital in excess of per value (w.2)  for $466,000

Explanation:

The journal entry will look as follows:

Account Name                                                Dr ($)                  Cr ($)          

Land                                                             230,000

Building                                                        372,000

Common Stock (w.1)                                                                136,000

Paid in capital in excess of per value (w.2)                           466,000

(To record issuance of stock in exchange for the land and building.)        

Workings:

w.1: Common stock = Number of shares issued * Price per share = 17,000 * $8 = $136,000

w.2: Paid in capital in excess of per value = Value of land + Value of building - Common stock = $230,000 + $372,000 - $136,000 = $466,000