Osbourne Company issued 50,000 shares of common stock in exchange for manufacturing equipment. The equipment was valued at $1,000,000. The stock has par value of $0.01 per share. The entry to record this transaction would include which of the following line items?

Question

Quizplus · Accepted Answer

The correct entry for issuing stock in exchange for equipment involves debiting the equipment account for its fair value ($1,000,000) and crediting common stock for the par value of the shares issued (50,000 shares * $0.01 = $500). The excess of the equipment's value over the par value of the stock ($1,000,000 - $500 = $999,500) is credited to paid-in capital.

Osbourne Company Issued 50,000 Shares of Common Stock in Exchange