Question

Record the issue of 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,000. The stock has no stated value.

Answer 1

Promotion expenses $40,000

To Common stock A/c $40,000

(Being the issuance of the shares is given to promoters is recorded)

Step-by-step explanation:

The journal entries are shown below:

Promotion expenses $40,000

To Common stock A/c $40,000

(Being the issuance of the shares is given to promoters is recorded)

Since the stock has no stated value so we do not consider the additional paid-in capital in excess of par value account

We only recorded the promotion expenses and the common stock account for $40,000