Answer:
(a).
Dr Cash 218,000
Cr Common Stock 25,000
Cr Paid-in capital - Common stock 193,000
( to record the issuance of 5,000 share at $45 with cost of $7,000)
(b)
Dr Land appraised expenses 46,000
Cr Common stock 5,000
Cr Paid-in capital - Common stock 41,000
( to record the issuance of shares in exchange for land appraisal services at market value of shares issuance)
Explanation:
(a)
Cash receipt is 5,000 x 45 - 7,000 = $218,000; Common stock increase by Par value x stock issuance = 5 x 5,000 = $25,000; Paid-in capital increase by (45-5) x 5,000 - 7,000 = $193,000.
(b)
Common stock increase by par value x stock issuance = 1,000 x 5 = $5,000; Appraisal Expenses is increased at the market value of the shares issuance = 1,000 x 46 = $46,000; Paid-in capital account increase by the amount calculated as ( Share price - Par value) x share issuance = (46-5) x 1,000 = $41,000.
