Issuance of Stock for Noncash Assets On July 1, 2014, Jones Corporation, a new c

Question

Issuance of Stock for Noncash Assets On July 1, 2014, Jones Corporation, a new corporation, issued 40,000 shares of its common stock to finance a corporate headquarters building. The building has a fair market value of $1, 200,000 and a book value of $800,000. Because Jones is a new corporation, it is not possible to establish a market value for its common stock. Prepare a journal entry to record the issuance of stock for the building, assuming the stock is no-par stock. Prepare a journal entry to record the issuance of stock for the building, assuming the stock has a stated value of $4 per share. If an amount box does not require an entry, leave it blank.

Explanation / Answer

Journal entries

1)Buildings

1,200,000

To Common Stock (40,000*10)

400,000

To Additional paid in capital

800,000

2)Building

1,200,000

To Common stock

1,200,000

3) Building

1,200,000

To Common stock (40,000*4)

160,000

To Additional paid in capital

1,040,000

1)Buildings

1,200,000

To Common Stock (40,000*10)

400,000

To Additional paid in capital

800,000

2)Building

1,200,000

To Common stock

1,200,000

3) Building

1,200,000

To Common stock (40,000*4)

160,000

To Additional paid in capital

1,040,000

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