Question

During its first year of operations, Swifty Corporation had these transactions pertaining to its common stock. Jan. 10 Issued 27,100 shares for cash at $6 per share. July 1 Issued 60,500 shares for cash at $7 per share. (a) Journalize the transactions, assuming that the common stock has a par value of $6 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $3 per share.

Answer 1

Swifty Corporation

Journal Entries:

a) Par value of $6 per share

Jan. 10

Debit Cash $162,600

Credit Common Stock $162,600

To record the issuance of 27,100 shares for cash at $6 per share.

July 1

Debit Cash $423,500

Credit Common Stock $363,000

Credit Additional Paid-in Capital $60,500

To record the issuance of 60,500 shares for cash at $7 per share.

b) Stock at no-par with a stated value of $3 per share:

Debit Cash $162,500

Credit Common Stock $81,300

Credit Additional Paid-in Capital $81,300

To record the issuance of 27,100 shares for cash at $6 per share.

July 1

Debit Cash $423,500

Credit Common Stock $181,500

Credit Additional Paid-in Capital $242,000

To record the issuance of 60,500 shares for cash at $7 per share.

Step-by-step explanation:

a) Data and Analysis:

a) Par value of $6 per share

Jan. 10 Cash $162,600 Common Stock $162,600 27,100 shares for cash at $6 per share.

July 1 Cash $423,500 Common Stock $363,000 Additional Paid-in Capital $60,500

b) Stock at no-par with a stated value of $3 per share:

Cash $162,500 Common Stock $81,300 Additional Paid-in Capital $81,300

July 1 Cash $423,500 Common Stock $181,500 Additional Paid-in Capital $242,000