Question

Tom Yuppy, a wealthy investor, exchanged a plot of land that originally cost him $33,000 for 1,100 shares of $10 par common stock issued to him by Leuig Corp. On the same date, Leuig Corp. issued an additional 2,200 shares of stock to Yuppy for $30 per share.What was the value of the land at the date of the stock issue?

Answer 1

Answer:

$11,000

Explanation:

Given that,

Original cost of land to him = $33,000

Number of shares issued = 1,100

Par value of common stock = $10

The plot of land is exchanged for the shares of common stock. Hence, the value of land at the date of the stock issue is determined by multiplying the number of shares issued with the par value of the common stock. So that we can compare the original cost of land and value of stock issued.

Value of the land:

= Number of shares issued × Par value of common stock

= 1,100 × $10

= $11,000