Answer:
(a)
Jan 10
Debit: Cash $159,600
Credit: Common Stock $159,600
July 1
Debit: Cash $406,000
Credit: Common Stock $348,000
Credit: Paid in Capital $58,000
(b)
Jan 10
Debit: Cash $159,600
Credit: Common Stock $26,600
Credit: Additional Paid in Capital $133,000
July 1
Debit: Cash $406,000
Credit: Common Stock $58,000
Credit: Additional Paid in Capital $348,000
Step-by-step explanation:
(a)
Jan 10
Debit: Cash (26,600 shares x $6 per share) $159,600
Credit: Common Stock (26,600 shares x $6 per share) $159,600
To Record Issuance of 26,600 shares at $6 per share par value.
July 1
Debit: Cash (58,000 shares x $7 per share) $406,000
Credit: Common Stock (58,000 shares x $6 per share) $348,000
Credit: Paid in Capital (58,000 shares x $1 per share) $58,000
To Record Issuance of 58,000 shares at $7 per share and excess paid in Capital in terms of Par Value.
(b)
Jan 10
Debit: Cash (26,600 shares x $6 per share) $159,600
Credit: Common Stock (26,600 shares x $1 per share) $26,600
Credit: Additional Paid in Capital (26,600 shares x $5 per share) $133,000
To Record Issuance of 26,600 shares of no-par common stock with $1 stated value for $6 per share.
Note: In the above scenario, the legal capital of company would be $26,600, because no-par common stock has a stated value.
July 1
Debit: Cash (58,000 shares x $7 per share) $406,000
Credit: Common Stock (58,000 shares x $1 per share) $58,000
Credit: Additional Paid in Capital (58,000 shares x $6 per share) $348,000
To Record Issuance of 58,000 shares of no-par common stock with $1 stated value for $7 per share.
Note: In the above scenario, the legal capital of company would be $58,000, because no-par common stock has a stated value.