adaptive waeypus corn WilleyPLUS ORION Accounting, 6e Practice- 11.2: Explain ho

Question

adaptive waeypus corn WilleyPLUS ORION Accounting, 6e Practice- 11.2: Explain how to account for the issuance of co.. 11.40: Felix Incorporated has just exchanged 1,250 shares of $65 par-value preferred stock for a parcel of land advertised for a price of $90,000. If the current market value of the stock is $75 per share, how should Felix journalize this transaction? A Land -Preferred Stock Credit of $12,500 Debit of $93,750: Preferred Stock Credit of $81,250; Paid-in Capital in Excess of Par B Land - Debit of $81,250; Paid-in Capital in Excess of Par-Preferred Stock Debit of $12,500; CPreferred Stock- Debit of $81,250: Paid-in Capital in Excess of Par -Preferred Stock - Debit D Preferred Stock Debit of $93,750; Paid-in Capital in Excess of Par-Preferred Stock Credit Preferred Stock Credit of $93,750 of $12,500; Land Credit of $93,750 of $12,500; Land = Credit of $81,250 St SUBMIT Confidence

Explanation / Answer

Fair value of land          90,000 Exchanged shares            1,250 Market price of share                  75 Market value of shares          93,750 par Value                  65 Par Value of Shares          81,250 Land             Dr          93,750      To Pref Share Capital      81,250      To Security Premium      12,500 (being land purchased by issue of pref shares) So option A is correct

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