Question

Exercise 13-2 Accounting for par, stated, and no-par stock issuances LO P1 Rodriguez Corporation issues 10,000 shares of its common stock for $40,800 cash on February 20. Prepare journal entries to record this event under each of the following separate situations. The stock has a $2 par value. The stock has neither par nor stated value. The stock has a $1 stated value.

Answer 1

Entries under 2$ par value.

Dr Cash (2*10000) 20000

Cr Share capital 20000

Cr Share premium (40800-20000) 20800

(To record share issue in excess of par and when par is at $2)

Entries under 1$ par value

Dr Cash (1 * 10000) 10000

Dr Share discount (40800-10000) 30800

Cr Share capital 40800

( To record share issue at discount )