USA Question about issuance of debt and equity

[2_bits]

We borrowed $10,000 from an individual and promised to pay back the amount and also gave him 40,000 shares for the money. I know that Cash should be debited and the liability should be credited but the question is should there be an entry made for recording the issuance of the 40,000 shares? If so could you please advise?

Any help would be appreciated.

 

[kirby]

Since you will pay back the $10,000, then you gave the person 40,000 shares for free? or is that in lieu of interest? or why??

 

[2_bits]

We really needed the money, so that is the agreement that we came to. He essentially got the shares for free, just not sure what JE is needed to record that.

 

[kirby]

If you borrowed $10k and repaid $10K and NO interest then the cost of the shares is the cost of what the interest should have been.
Meanwhile , what is the market value for those shares ?

 

[2_bits]

The stock is very thinly traded on the pink sheets and is currently at $1.00, but it moves between 0.40 and 1.50 quite easily. Thanks for the help. The $10k debt is still outstanding, so I guess the cost of the shares should be the total interest that we would have paid until the debt is repaid?