Question

Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc.'s common stock with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc., will include a credit to?

Answer 1

Answer:

Paid-in Capital in Excess of Par $8,000

Explanation:

Based on the information given we were told that Garcia contribute land that has  a fair market value of the amount of $10,000 which was exchange for 200 shares of the common stock of Damiann Inc.'s that has a par value of $10 per share which means that the journal entry to record the transaction in the books of Damian, Inc., will include a credit to Paid-in Capital in Excess of Par $8,000 calculated as:

Fair market value  $10,000

Less  common stock $2,000

(200 shares *$10 per share)

Paid-in Capital in Excess of Par $8,000