Question

Clothing Frontiers began operations on January 1 and engages in the following transactions during the year related to stockholders’ equity. January 1 Issues 500 shares of common stock for $30 per share. April 1 Issues 120 additional shares of common stock for $34 per share. Record the transactions, assuming Clothing Frontiers has either $1 par value common stock or $1 stated value stock.

1) Record the issuance of 500 shares of common stock for $30 per share.

2) Record the issuance of 120 additional shares of common stock for $34 per share.

Answer 1

The journal entries are as follows:

(1) on January 1,

Cash A/c (500 × $30) Dr. $15,000

To common stock A/c(500 × $1) $500

To Additional paid in capital - common stock $14,500

(To record the issuance of 500 shares of common stock for $30 per share)

(2) on April 1,

Cash A/c (120 × $34) Dr. $4,080

To common stock A/c(120 × $1) $120

To Additional paid in capital - common stock $3,960

(to record the issuance of 120 additional shares of common stock for $34 per share.)