Assume the same facts as above, but the Elcorns stock has a par value of $1 per share. Prepare the journal entry (hint: there will be two credits; Please see Chapter 3; for additional examples, see chapter 18)

Journal Entry Debit Credit

Land

(10,000 shares at $20 per share) 200,000

Common stock

(10,000 shares at $1 par per share) 10,000

Paid-in capital excess of par

(Remainder) 190,000

QUESTIONS:

A) In the PPT example, what is the effect on net income on March 31 (not on some future date), explain ?

B) In the modified example (with par value), what is the effect on net income on March 31 (not on some future date) ?

LO10-4 Asset Acquired by Issuing Equity Securities On March 31, 2021, the Elcorn Company issued 10,000 shares of its no-par 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 $20 per share. Credit Journal Entry Land Common stock Debit 200,000 200,000 10,000 shares @ $20 per share = $200,000 10.44