The purchase of land for a combination of cash and issuance of shares would require which of the following?
A)Increase in Land, Increase in Common shares, Increase in Cash
B)Increase in Cash, Decrease in Common shares, Decrease in Land
C)Increase in Land, Increase in Common shares
D)Increase in Land, Increase in Common shares, Decrease in Cash

Question

Quizplus · Accepted Answer

The purchase of land would increase the asset account "Land" and this would be recorded as a debit. The issuance of shares would increase the equity account "Common shares" and this would also be recorded as a debit. Cash would be used to make a part payment for the purchase of land, resulting in a decrease in the asset account "Cash" which would be recorded as a credit. Therefore, the best choice would be (D) Increase in Land, Increase in Common shares, Decrease in Cash.

The Purchase of Land for a Combination of Cash and Issuance