Osbourne Ltd issued 90,000 ordinary shares in exchange for manufacturing equipment.The equipment was valued at $1,350,000.The shares have a market value of $0.01 per share.Which of the following is included in the journal entry to record this transaction?

Question

Quizplus · Accepted Answer

In this transaction, Osbourne Ltd issued 90,000 ordinary shares in exchange for manufacturing equipment valued at $1,350,000. Therefore, the journal entry to record this transaction would include a credit to Ordinary share capital for $1,350,000 as this is the amount of shares issued in exchange for the equipment. Option A is incorrect because there is no gain on the sale of shares. Option B is incorrect because there was no cash involved in this transaction. Option C is incorrect because the value of the shares issued is $1,350,000 rather than $90,000.

Osbourne Ltd Issued 90,000 Ordinary Shares in Exchange for Manufacturing