Question

Arizona Corporation has two classes of stock common, $2 par value; and preferred, $10 par value Requirements

1. Journalize Arizona's issuance of 4,500 shares of common stock for $15 per share.
2. Journalize Arizona's issuance of 4,500 shares of preferred stock for a total of $45,000

Answer 1

To journalize the issuance of stock, an entry needs to be made in the company's accounting records. The entry for the issuance of common stock would involve debiting the Common Stock account and crediting the Cash account. The entry for the issuance of preferred stock would involve debiting the Preferred Stock account and crediting the Cash account.

Step-by-step explanation:

To journalize the issuance of 4,500 shares of common stock for $15 per share, we need to recognize that this is a transaction that increases the equity capital of the company. The entry would be:

Date: [Date of issuance]

Account: Common Stock

Debit: [number of shares issued x par value]

Credit: Cash

Amount: [number of shares issued x par value x price per share]

To journalize the issuance of 4,500 shares of preferred stock for a total of $45,000, the entry would be:

Date: [Date of issuance]

Account: Preferred Stock

Debit: [number of shares issued x par value]

Credit: Cash

Amount: [total cash received]