E&F Corporation issued 3,000 shares of $10 par value common stock in exchange for a tract of land valued at $135,000.Since all company stock is privately held,there is no market value for the stock.The journal entry to record this exchange includes a:
A)credit to Paid-in-Capital in Excess of Par--Common Stock for $105,000
B)credit to Common Stock for $135,000
C)debit to Donated Capital for $105,000
D)debit to Land for $30,000

Question

Quizplus · Accepted Answer

The correct journal entry to record the exchange includes a credit to Paid-in-Capital in Excess of Par--Common Stock for $105,000. This is because the company issued 3,000 shares at a $10 par value, totaling $30,000 (3,000 shares * $10), and the land was valued at $135,000. The excess of the land's value over the par value of the stock ($135,000 - $30,000) is $105,000, which is credited to Paid-in-Capital in Excess of Par--Common Stock.

E&F Corporation Issued 3,000 Shares of $10 Par Value Common