Which of the following is correct for Smith Company when Smith issues 10,000 sha

Question

Which of the following is correct for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $23,000 cash in exchange for the building? Smith Company exchanges assets to acquire a building. The market price of the Smith stock on the exchange date was $41 per share and the building's book value on the books of the seller was $230,000. Total assets increase $410,000. Stockholders' equity increases $387000. O Total assets increase $387000. Stockholders' equity increases $230,000.

Explanation / Answer

Journal entry of exchange :

Total assets increase = (433000-23000) = 410000

so answer is a) Total assets increase $410,000

Date accounts & explanation debit credit Building 433000      Cash 23000      Common stock 100000       Paid in capital in excess of par value (31*10000) 310000

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.