Question

29,000 shares reacquired by Sandhill Corporation for $57 per share were exchanged for undeveloped land that has an appraised value of $1,480,000. At the time of the exchange, the common stock was trading at $63 per share on an organized exchange.

(a) Prepare the journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method.

Answer 1

Journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method is as follows:

Date	Account title and explanation	Debit in $	Credit in $
	Land ( 29,000 shares *$ 63)	$ 18,27,000
	Treasury stock ( 29,000 shares *$ 57)		$ 16,53,000
	Paid in capital from treasury stock    (To Record the acquisition of land)		$ 1,74,000

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