Question

Prepare journal entries to record each of the following four separate issuances of stock. A corporation issued 7,000 shares of $10 par value common stock for $84,000 cash. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $55,000. The stock has a $2 per share stated value. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $55,000. The stock has no stated value. A corporation issued 1,750 shares of $50 par value preferred stock for $142,500 cash.

Answer 1

The Journal entries are as follows:

(i) cash A/c Dr. $84,000

To Common stock, $10 par value $70,000

To Paid-in capital in excess of par value, Common stock $14,000

(To record the issuance of stock)

(ii) Organization expenses A/c Dr. $55,000

To Common stock, $2 stated value $7,000

To Paid-in capital in excess of stated value, Common stock $48,000

(To record the issuance of stock)

(iii) Organization expenses A/c Dr. $55,000

To Common stock, no-par value $55,000

(To record the issuance of stock)

(iv) Cash A/c Dr. $142,500

To Preferred stock, $50 par value[1,750 × $50) $87,500

To Paid-in capital in excess of par value, preferred stock $55,000

(To record the issuance of stock)