Question

ICOT Industries issued 15 million of its $1 par common shares for $424 million on April 11, 2012. Legal, promotional, and accounting services necessary to effect the sale cost $2 million.

Required: Show the journal entry to record the issuance. How does this treatment compare to debt issue costs we talked about in chapter 14?

Answer 1

Date Account title and Explanation Debit Credit

Apr 11 Cash ($424 million - $2 million) $422,000,000

Common stock $15,000,000

Paid in capital in excess of par value $407,000,000

($422,000,000 - $15,000,000)

(To record the issue of common Stock)