Question

On May 10, Paige Corporation issues 2,500 shares of $5 par value common stock for cash at $13 per share.

Journalize the issuance of the stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

The Journal entry is as follows:

Cash Account Dr. $32,500

To common stock account $12,500

To Paid in capital in excess of common stock $20,000

(To record the issuance of the stock)

Workings:

Cash = 2,500 shares × $13 per share

= $32,500

Common stock = 2,500 × $5 per share

= $12,500

Paid in capital in excess of common stock:

= 2,500 × $8 per share

= $20,000