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lisabon 2012 [21]
2 years ago
6

Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc.'s common sto

ck with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc., will include ________.
Business
1 answer:
zavuch27 [327]2 years ago
4 0

Answer:

Dr Land account 10,000

Cr Common Stock account 2,000

Cr Capital Paid in Excess of Par Value account 8,000

Whenever a company sells stock it must record the transaction under common stock account at par value (= 200 shares x $10 = $2,000). Any extra money received must be recorded as capital paid in excess of par value (= $10,000 - $2,000). The basis for the land that Jose Garcia contributes must be its fair market value ($10,000).

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