Question

The Shoe Exchange issues 3,000 shares of its $1 par value common stock to provide funds for further expansion. The issue price is $19 per share. What is the entry to record the issuance of the stock?

Answer 1

Debit Cash account $57,000

Credit Shares capital $3,000

Credit Share premium $54,000

Being entries to record cash received from the issuance of shares

Step-by-step explanation:

Par value per share = $1

Issue price per share = $19

Premium per share from issue = $19 - $1

= $18

Number of issued shares = 3000

Share capital balance from issue = 3000 × $1

= $3000

Premium balance = 3000 × $18

= $54,000

Cash received from Issue = 3000 × $19

= $57,000

Entries to be posted

Debit Cash account $57,000

Credit Shares capital $3,000

Credit Share premium $54,000

Being entries to record cash received from the issuance of shares.