The trial balance of WM Partnership is as follows:
Wilfred and Mike decide to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:
2.All assets and liabilities are transferred to the corporation.
3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares.
4.The partners share profits and losses in the ratio 7:3.
-Based on the preceding information,the journal entry on W & M Corporation's books to record the assets and the issuance of the common stock will include a credit to Additional Paid-In Capital for:

Question

The trial balance of WM Partnership is as follows:
  Wilfred and Mike decide to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:
  2.All assets and liabilities are transferred to the corporation.
3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares.
4.The partners share profits and losses in the ratio 7:3.
-Based on the preceding information,the journal entry on W & M Corporation's books to record the assets and the issuance of the common stock will include a credit to Additional Paid-In Capital for:

Quizplus · Accepted Answer

The credit to Additional Paid-In Capital is calculated as the difference between the fair value of the assets received and the par value of the common stock issued. If the fair value of the assets is $81,000 and the par value of the stock is $50,000, then the Additional Paid-In Capital is $81,000 - $50,000 = $31,000.

The Trial Balance of WM Partnership Is as Follows