Macker Company has 130,000 shares authorized and 10,000 shares issued of $5 par value common stock. On January 1, the company issues an additional 2,000 shares of common stock in exchange for a building, which has a market value of $150,000.
The journal entry to record the exchange will cause Total Contributed Capital to:

Question

Quizplus · Accepted Answer

The journal entry to record the exchange will increase Total Contributed Capital by the market value of the building, which is $150,000. This is because when a company issues stock in exchange for non-cash assets, the assets are recorded at their fair market value.

Macker Company Has 130,000 Shares Authorized and 10,000 Shares Issued