Question

Kylie Jenner Cosmetics issues 100,000 shares of its $0.01 par value stock at the market price existing at the time of issuance of $20 per share. What is the journal entry for this issuance?

A) Debit Cash $2,000,000; Credit Common Stock $1,000; Credit Paid-in Capital in Excess of Par $1,999,000

B) Debit Cash $2,000,000; Credit Common Stock $1,000,000; Credit Paid-in Capital in Excess of Par $1,000,000

C) Debit Cash $2,000,000; Credit Common Stock $100,000; Credit Paid-in Capital in Excess of Par $1,900,000

D) Debit Cash $2,000,000; Credit Common Stock $2,000,000

Answer 1

The journal entry for the issuance of 100,000 shares of Kylie Jenner Cosmetics stock at a par value of $0.01 and a market price of $20 per share is Debit Cash $2,000,000; Credit Common Stock $100,000; Credit Paid-in Capital in Excess of Par $1,900,000.

Step-by-step explanation:

The correct journal entry for the issuance of 100,000 shares of Kylie Jenner Cosmetics stock at a par value of $0.01 and a market price of $20 per share would be:

A) Debit Cash $2,000,000; Credit Common Stock $100,000; Credit Paid-in Capital in Excess of Par $1,900,000

This entry records the receipt of cash (debiting the Cash account for $2,000,000) and the issuance of the shares (crediting the Common Stock account for $100,000, representing the par value of the shares, and crediting the Paid-in Capital in Excess of Par account for $1,900,000, representing the excess of the market price over the par value).