Question

Western Wear Clothing issues 1,600 shares of its $0.01 par value common stock to provide funds for further expansion. Assuming the issue price is $13 per share, record the issuance of common stock.

Answer 1

Journal Entry

Explanation:

The Journal Entry is shown below:-

Cash Dr, (1,600 shares × $13 per share) $ 20,800

To Common Stock (1,600 shares × $ 0.01 par) $16

To Additional Paid in Capital in excess of par-Common Stock $20,784

(Being Issuance of common stock is recorded)

Therefore for recording the issuance of common stock we debited cash and credited common stock and additional Paid in Capital in excess of par common stock