Question

Accounting for par, stated, and no-par stock issuances LO P1

Rodriguez Corporation issues 16,000 shares of its common stock for $176,900 cash on February 20. Prepare journal entries to record this event under each of the following separate situations.
The stock has a $8 par value.
The stock has neither par nor stated value.
The stock has a $4 stated value.
1. Record the issue of 16,000 shares of no par, no stated value common $94,900 cash.
2. Record the issue of 16,000 shares of $2 stated value common stock for $94,900 cash.

Answer 1

Rodriguez Corporation

Journal Entries:

a. Debit Cash $176,900

Credit Common Stock $128,000

Credit Additional Paid-in Capital $48,900

To record the issue of 16,000 shares at $8 par value.

b. Debit Cash $176,900

Credit Common Stock $176,900

To record the issue of 16,000 shares at no par or stated value.

c. Debit Cash $176,900

Credit Common Stock $64,000

Credit Additional Paid-in Capital $112,900

To record the issue of 16,000 shares at $4 state value.

1. Issue of 16,000 shares of no par, no stated value common $94,900 cash.

Journal Entry:

Debit Cash $94,900

Credit Common Stock $94,900

To record the issue of 16,000 shares at no par or stated value.

2. Record the issue of 16,000 shares of $2 stated value common stock for $94,900 cash.

Journal Entry:

Debit Cash $94,900

Credit Common Stock $32,000

Credit Additional Paid-in Capital $62,900

To record the issue of 16,000 shares of $2 stated value for cash.

Step-by-step explanation:

a) Data and Calculations:

Number of common stock shares issued = 16,000

Cash collected from the issue = $176,900

Date of issue = February 20.

b) When shares are issued at no par or stated value, the corresponding credit for the Common Stock account equals the cash realized. When the par value is less than the issued price, the corresponding credit above the par value is credited to the Additional Paid-in Capital account.