A corporation issued 7000 shares of its $10 par value common stock in exchange for land that has a market value of$82,000. The entry to record this transaction would include: a) A credit to Land for $70,000.
b) A debit to Land for $7.
c) A credit to common stock for $82,000.
d) A debit to Common Stock for $70,000.
e) A credit to Contributed Capital in Excess of Par value. Common Stock for $12,000.

Option e is the correct answer.

Explanation:

The issuance of common stock in exchange of land would mean a debit to the asset account for land at the market value for the land which is $82000. The other side of the transaction would contain two accounts- a credit to the Common Stock account and a credit to the Paid in/Contributed Capital in excess of Par value, Common Stock.

The value of Common Stock will be = 7000 * 10 = 70000

The remaining of 82000 - 70000 = 12000 will be credited to the contributed capital in excess of par value account.

The entry to record this transaction will be,

Land                                                                                    82000 Dr

   Common Stock                                                                           70000 Cr

   Contributed Capital in excess of par value-Common Stock   12000 Cr

advanced placement tests

answer; (inseparability);