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Bramble Inc.’s $10 par value common stock is actively traded at a market price of $15...


Bramble Inc.’s $10 par value common stock is actively traded at a market price of $15 per share. Bramble issues 6,700 shares to purchase land advertised for sale at $81,000.

Journalize the issuance of the stock in acquiring the land. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Answer #1

Stock may be issued for Non-cash assets, to record this type of transactions market value of item received or market value of stock issed whichever is more clearly evident.

In the given situation, market value of item received i.e., Land is not available. Advertised amount is not a reliable market value. Then the transaction is reocrded based on market vaue of stock issued.

Journal entry for issuance of stock in acquiring the land.

Account Details Debit Credit
Land (6700 shares * $15 market price) 100500
Common Stock (6700 shares * $10) 67000
Paid-in capital in excess of par value (6700 shares * $5) 33500

Note : Please comment down for any further clarifications.

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