On June 1, 4,000 shares of $10 par value common stock are issued in exchange for new equipment. Comparable equipment sells for $58,000 cash. Other shares of this class of common stock originally sold for $13 per share three years earlier.
The journal entry to record this exchange should increase the Equipment account for what amount?

Question

Quizplus · Accepted Answer

When recording the exchange of stock for equipment, the equipment should be recorded at its fair market value, which is $58,000 in this case. The original issue price of the stock or its par value is not relevant for this transaction.

On June 1, 4,000 Shares of $10 Par Value Common