00,000 117,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:On June 30, 2024, Ericson, Inc. purchased land. In payment for the land, Ericson, Inc. issued 10,000 shares of common stock with a $10 par value. The land had been appraised at a market value of $117,000. The journal entry to record this transaction would be:
1. **Option A:**
- Debit: Land $100,000
- Credit: Common Stock—$10 Par Value $100,000
2. **Option B:**
- Debit: Land $117,000
- Credit: Common Stock—$10 Par Value $100,000
- Credit: Paid-In Capital in Excess of Par—Common $17,000
3. **Option C:**
- Debit: Land $137,000
- Credit: Common Stock—$10 Par Value $100,000
- Credit: Paid-In Capital in Excess of Par—Common $37,000
4. **Option D:**
- Debit: Land $117,000
- Credit: Common Stock—$10 Par Value $117,000
The correct option reflects both the par value of the stock issued and the market value of the land received.
Expert Solution

Step 1
Answer :
Journal entry to record the transaction :
Account Title | Debit | Credit |
Land | $117,000 | |
Common stock (10,000*$10) | $100,000 | |
Paid in capital in excess of par common ($117,000-$100,000) | $17,000 |
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