Question

Prepare journal entries to record each of the following four separate issuances of stock.

1. A corporation issued 8,000 shares of $20 par value common stock for $192,000 cash.
2. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $58,500. The stock has a $1 per share stated value.
3. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $58,500. The stock has no stated value.
4. A corporation issued 2,000 shares of $50 par value preferred stock for $158,500 cash.

Answer 1

Answer: Please see explanation column for answers

Step-by-step explanation

1.To record the issue of 8,000 shares of $20 par value.

Account titles and explanation Debit Credit

Cash Account $192,000

Common Stock( 8,000 shares x $20) $160,000 $160,000

Paid-in In Excess of Par $32,000

2. To record the issue of 4,000 shares of $1 stated value.

Account titles and explanation Debit Credit

Retained Earnings $4,000

Common Stock $4,000

3. To record the issue of 4,000 shares of no stated value.

Account titles and explanation Debit Credit

Retained Earnings $58,500

Common Stock $58,500

4.To record the issue of 2,000 shares of $50 par value.

Account titles and explanation Debit Credit

Cash $158,500

Preferred Stock( 2,000 shares x $50) $100,000

Paid-in In Excess of Par $58,500