Question

Prepare the journal entry to record Jevonte Company's issuance of 36,000 shares of its common stock assuming the shares have a:

a. $2 par value and sell for $18 cash per share.

b. $2 stated value and sell for $18 cash per share.

Answer 1

a

Dr Cash ($18 x 36,000 shares) $ 648,000

Cr Common Stock ($2 x 36,000 shares) $72,000

Cr Share premium ($16,000 x 36,000 shares) $576,000

b

Dr Cash ($18 x 36,000 shares) $648,000

Cr Common Stock ($2 x 36,000 shares) $ 72,000

Cr Share premium ($16 x 36,000 shares) $576,000

Step-by-step explanation:

On both situations the journal entries remain the same.

The cash amount received of $648,000 shall be debited while the nominal values of the shares of $2 each shall be credited to the share capital account and the balance of $16 each shall be credited to share premium.