Jenny's Lawn Service issued 100 shares of $10 par value stock and received a lawnmower with a fair market value of $2,500. The entry to record this transaction would include:

Question

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- The company issued 100 shares of $10 par value stock, which means its total common stock is $1,000 (100 shares x $10). So, the company needs to credit the common stock account for $1,000.
- The lawnmower is received at a fair market value of $2,500, which is higher than the common stock value. The difference between the fair market value and the common stock value is treated as additional paid-in capital. Therefore, the company needs to credit the excess amount of $1,500 to the Paid-in Capital in Excess of Par-Common Stock account.
- Finally, to balance the entry, the company needs to debit the Equipment account for the fair market value of the lawnmower, which is $2,500.

Jenny's Lawn Service Issued 100 Shares of $10 Par Value