Question

Prepare the journal entry to record Zende Company’s issuance of 75,000 shares of $5 par value common stock assuming the shares sell for:______.

a. $5 cash per share.
b. $6 cash per share.

Answer 1

a. Debit Cash $375,000

Credit Common Stock for $375,000

b. Debit Cash $450,000

Credit Paid-in capital in Excess of par for $75,000

Credit Common Stock $375,000

Step-by-step explanation:

Preparation of the journal entry to record Zende Company’s issuance

a. Debit Cash $375,000

Credit Common Stock for $375,000.

(75,000 shares*$5 per share)

b. Debit Cash $450,000

(75,000 shares*$6 per share)

Credit Paid-in capital in Excess of par for $75,000

($450,000-$375,000)

Credit Common Stock $375,000

(75,000 shares*$5 per share)