Question

Question 8 View Policies Current Attempt in Progress Grouper Inc.'s $9 par value common stock is actively traded at a market price of $15 per share. Grouper issues 4,900 shares to purchase land advertised for sale at $89,500. Journalize the issuance of the stock in acquiring the land. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

Since market value is higher than the par value, the fresh issue is done at premium.

Land = Number of share * Market price per share

        = 4,900 * $15

        = $73,500; this is debit, since it is an asset and increasing

Common stock = Number of shares issued × Par value of each share

                        = 4,900 × $9

                        = $44,100; this is credit, since it constitutes ownership rights.

Paid in capital in excess of par = Land sale price – Common stock

                                                = 73,500 – 44,100

                                                = $29,400; this is credit, since it comes under stockholders’ equity.

Journal

Date	Account titles and explanation	Ref.	Debit	Credit
	Land		$73,500
	Common stock			$44,100
	Paid in capital in excess of par			$29,400
	To record purchase of land through issue of 4,900 shares at $9 par, with market price of $15.