Dolly's Best issued 200 shares of its $6 common stock in exchange for used packaging equipment with a fair market value of $3,000. The entry to record the acquisition of the equipment would include a:

Question

Quizplus · Accepted Answer

The entry to record the acquisition of the equipment would include a credit to Paid-in Capital in Excess of Par Value-Common for $1,800 because the common stock has a par value of $6 per share, resulting in a total par value of $1,200 (200 shares x $6). Since the equipment has a fair market value of $3,000, the excess of $1,800 ($3,000 - $1,200) is credited to Paid-in Capital in Excess of Par Value-Common.

Dolly's Best Issued 200 Shares of Its $6 Common Stock