Question

Environmental Designs issues 10,000 shares of its $1 par value common stock at $25 per share. (1) Record the issuance of the stock. (2) Record the issuance of stock assuming it is no-par stock.

Answer 1

1. Dr Cash 250,000

Cr Common Stock 10,000

Cr Additional Paid-in Capital 240,000

2. Dr Cash 250,000

Cr Common Stock250,000

Step-by-step explanation:

(1) Preparation of the journal entry toRecord the issuance of the stock

Dr Cash 250,000

(10,000 shares × $25)

Cr Common Stock 10,000

(10,000 shares × $1)

Cr Additional Paid-in Capital

240,000

(250,000-10,000)

( Being to record the Issue of common stock above par)

(2) Preparation of the journal entry to Record the issuance of the stock assuming it is no-par value stock.

Dr Cash 250,000

(10,000 shares × $25)

Cr Common Stock250,000

(Being to record the Issue of no-par value common stock)