Question

On December​ 2, 2018,​ Eshares, Inc. purchases land. In payment for the​ land, Eshares, Inc. issues

8,000

shares of common stock with

$1

par value. The land has been appraised at a market value of

$400,000.

Which of the following is included in the journal entry to record this​ transaction?

A.credit Common

Stock—$1

Par Value for

$8,000

and credit

Paid−In

Capital in Excess of

Par—Common

$392,000

B.credit Common

Stock—$1

Par Value for $400,000

C.debit Common

Stock—$1

Par Value for

$8,000

and debit

Paid−In

Capital in Excess of Par

—Common

$392,000

D.

debit Cash $400,000

Answer 1

Answer for this is:

Credit Common Stock $ 1 Par Value for $ 8,000 and Credit Paid-In Capital in Excess of Par-Common $392,000

Explaination of this is:

Given:

Eshares, Inc. purchases a land in which Eshares issues 8,000 shares of common stock with $ 1 par value and the land was appraised at a market value of $ 400,000

Journal entry for this is:

Credit Common Stock $ 1 Par Value for $ 8,000

Credit Paid-In Capital in Excess of Par-Common $392,000

Calculation for the above is:

Land= $400,000

Common stock = 8,000 shares x $1 = $8,000

Paid-in Excess of par = $400,000 - $8,000

= $392,000