On June 17, the Lattern Company issued 120,000 shares of its $0.10 par value common stock in exchange for land. On the date of the transaction, the fair value of the common stock, evidenced by its market price, was $10 per share. The journal entry to record this transaction includes:
A) Debt: Land, $1,200,000.
B) Credit: Cash, $1,200,000.
C) Debit: Land, $12,000.
D) No entry for this exchange.

Question

Quizplus · Accepted Answer

The land is recorded at the fair value of the stock exchanged = 120,000 shares × $10 per share = $1,200,000.

On June 17, the Lattern Company Issued 120,000 Shares of Its