Entry For Stock Purchase of Company in Exchange for Note Payable

by Linh
(Virgina)

Stock Purchase

Stock Purchase

We are considering purchase of company from existing owner. It is sub chapter S. We get the stock and pay the owner cash and he takes back a note payable. How are these entries done?


Thank you.

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Dec 05, 2017
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Journal Entry For Stock Purchased
by: Anonymous

When you purchased the stock and paid the owner cash you would enter:

CREDIT Cash Contribution (Owners Contribution)
DEBIT Stock Investment (Owners Equity)

On his end when he sells the stock and takes back a note payable he would enter:

DEBIT Bank Account (Asset)
CREDIT Stock Payable (Liability)

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