Question
Brownie Company acquired land valued at $500,000 for property tax purposes in exchange for 25,000 shares of its $10 stated value common stock. The stock
Brownie Company acquired land valued at $500,000 for property tax purposes in exchange for 25,000 shares of its $10 stated value common stock. The stock is widely traded and sold for $18 per share. What journal entry should be recorded by Brownie Company when they purchase the land?
a. debit Land $250,000; credit Common Stock $250,000.
b. debit Land $500,000; credit Common Stock $250,000 and Paid In Capital in Excess of Par Value-Common Stock $250,000.
c. debit Land $450,000; credit Common Stock $250,000 and Paid In Capital in Excess of Stated Value-Common Stock $200,000.
d. debit Land $200,000; credit Common Stock $200,000.
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