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Chapter 13: Q5SE (page 708)

Journalizing issuance of stock for assets other than cash

Cedar Corporation issued 36,000 shares of \(1 par value common stock in exchange for a building with a market value of \)160,000. Record the stock issuance.

Short Answer

Expert verified

Building will be debited with $160,000; Common stock- $1 par value will be credited with $36,000 and Paid-in capital in excess of par will be credited with $124,000.

Step by step solution

01

Basic Introduction-

Value of building: $160,000

CommonStock=NumberofShares×ParValuePerShare=36,000×$1=$36,000

02

Journal entry of issuance of common stock

Date

Transaction

Debit

Credit

Building

$160,000

Common stock- $1 par value

$36,000

Paid-in capital in excess of par

$124,000

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