What is the correct journal entry

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Reference no: EM132837760

Question - The seller is willing to accept 2,000 of Handel's shares plus $100,000 cash in the exchange. For this option, Tony has proposed the following journal entry. If this option is used, the sale would close on February 28, 2021. Tony likes this option because he believes it will have a positive impact on the yearend current ratio by adding the warehouse as an asset without adding any new debt. DR Warehouse 300,0000 CR Cash 100,000 CR Common Shares 200,000.

What is the issue with the above transaction if the warehouse is valued at $250,000?

What is the correct journal entry?

If possible reference ASPE handbook in regards to this problem.

Reference no: EM132837760

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