Question

Rodriguez Corporation issues 8,000 shares of its common stock for $208,800 cash on February 20. Prepare journal entries to record this event under each of the following separate situations.

a. The stock has a $14 par value.
b. The stock has neither par nor stated value.
c. The stock has a $7 stated value.

Answer 1

A. Dr Cash $208,800

Cr Common stock, $14 par value $112,000

Cr Paid-in capital in excess of par value,common stock $96,800

B. Dr Cash $208,800

Cr Common stock, no-par value $208,800

C. Dr Cash $208,800

Cr Common stock, $7stated value $56,000

Cr Paid-in capital in excess of statedvalue, common stock$152,800

Step-by-step explanation:

Preparation of Journal entries

a. The stock has a $14 par value.

Dr Cash $208,800

Cr Common stock, $14 par value $112,000

($14 par value*8,000 shares)

Cr Paid-in capital in excess of par value,common stock $96,800

($208,800-$112,000)

b. The stock has neither par nor stated value.

Dr Cash $208,800

Cr Common stock, no-par value $208,800

c. The stock has a $7 stated value.

Dr Cash $208,800

Cr Common stock, $7stated value $56,000

($7 par value*8,000 shares)

Cr Paid-in capital in excess of statedvalue, common stock$152,800

($208,800-$56,000)