On July 1, 2014, Mac Corporation, a new corporation, issued 20,000 shares of its common stock to finance a corporate headquarters building. The building has a fair market value of $600,000 and a book value of $400,000. Because Mac is a new corporation, it is not possible to establish a market value for its common stock. Prepare journal entries to record the issuance of stock for the building, assuming the following conditions: (1) the par value of the stock is $10 per share; (2) the stock is no-par stock; and (3) the stock has a stated value of $4 per share.
On July 1, 2014, Mac Corporation, a new corporation, issued 20,000 shares of its common stock to finance a corporate headquarters building. The building has a fair market value of $600,000 and a book value of $400,000. Because Mac is a new corporation, it is not possible to establish a market value for its common stock.
Prepare
The company may issue shares for cash or against non-cash assets. In case of non-cash assets transaction, the assets will be debited against stock account.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
