Question

Clothing Frontiers began operations on January 1 and engages in the following transactions during the year related to stockholders’ equity. January 1 Issues 600 shares of common stock for $40 per share. April 1 Issues 100 additional shares of common stock for $44 per share.

Required:

a) Record the transactions, assuming Clothing Frontiers has no-par common stock.

b) Record the transactions, assuming Clothing Frontiers has either $1 par value or $1 stated value common stock.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

1. Cash A/c Dr $24,000 (600 shares × $40)

To Common Stock $600 (600 shares × $1)

To Additional Paid-in Capital in excess of par - Common Stock $23,400

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

2. Cash A/c Dr $4,400 (100 shares × $44)

To Common Stock $100 (100 shares × $1)

To Additional Paid-in Capital in excess of par - Common Stock $4,300

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