Need Help Solving A corporation issued 7,200 shares of $10 par value common stoc

Question

Need Help Solving

A corporation issued 7,200 shares of $10 par value common stock in exchange for some land with a market value of $114,000. The entry to record this exchange is:

Multiple Choice

A. Debit Common Stock $114,000; credit Land $114,000.

B. Debit Land $114,000; credit Common Stock $72,000; credit Paid-In Capital in Excess of Par Value, Common Stock $42,000.

C.Debit Land $114,000; credit Common Stock $114,000.

D. Debit Land $72,000; credit Common Stock $72,000.

E. Debit Common Stock $72,000; debit Paid-In Capital in Excess of Par Value, Common Stock $42,000; credit Land $114,000.

Explanation / Answer

The correct answer is :

B. Debit Land $ 114,000, credit Common Stock $ 72,000 ; credit Paid-In Capital in Excess of Par Value, Common Stock $ 42,000

Note :

Common Stock = 7,200 Shares *$ 10

Paid-In Capital in Excess of Par Value, Common Stock = $114,000 - ( 7,200 * $ 10)

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