Question

If the issue price is $12 per share, what is the journal entry to record the sale of the shares? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Step-by-step explanation:

We assume the 8 million shares are sold at $1 par common stock

The journal entry to record the issuance of common stock is shown below:

Cash A/c Dr $96,000,000 ($8,000,000 × $12)

To Common Stock $8,000,000 ($8,000,000 × $1)

To Additional Paid-in Capital in excess of par - Common Stock $88,000,000

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

While issuing the stock, we debited the cash account and credited the common stock and additional paid-in capital account