Question

Rodriguez Corporation issues 13,000 shares of its common stock for $130,900 cash on February 20.

Prepare journal entries to record this event under each of the following situations :
1) the stock has a $8 par value.
2) The stock has neither par nor stated value
3) The stock has an $4 stated value.

Answer 1

1. Dr Cash $130,900

Cr Common stock, $8 par value $104,000

Cr Paid-in capital in excess of par value, common stock $26,900

2. Dr Cash $130,900

Cr Common stock, no-par value $130,900

Dr Cash $130,900

Cr Common stock, $4 stated value $52,000

Cr Paid-in capital in excess of stated value, common stock $78,900

Step-by-step explanation:

1. Preparation of the journal entries to record the stock has a $8 par value

Dr Cash $130,900

Cr Common stock, $8 par value $104,000

(13,000 shares*$8 par value)

Cr Paid-in capital in excess of par value, common stock $26,900

($130,900-$104,000)

2. Preparation of the journal entries to record The stock has neither par nor stated value

Dr Cash $130,900

Cr Common stock, no-par value $130,900

3. Preparation of the journal entries to record The stock has an $4 stated value

Dr Cash $130,900

Cr Common stock, $4 stated value $52,000

(13,000 shares*$4 par value)

Cr Paid-in capital in excess of stated value, common stock $78,900

($130,900-$52,000)