Question

Clothing Frontiers began operations on January 1 and engages in the following transactions during the year related to stockholdersâ equity.

January 1 Issues 700 shares of common stock for $34 per share.
April 1 Issues 110 additional shares of common stock for $38 per share.

Record the transaction, assuming Clothing Frontiers has no-par common stock.

Answer 1

Answer and Explanation:

The journal entries are as follows

On Jan 1

Cash A/c Dr $23,800 (700 shares × $34)

To Common stock $23,800 (700 shares × $34)

(Being the issuance of the common stock is recorded)

On April 1

Cash A/c Dr $4,180 (110 shares × $38)

To Common stock $4,180 (110 shares × $38)

(Being the issuance of the common stock is recorded)

For recording these transactions we debited the cash as it increased the cash balance and at the same time it also increased the stockholder equity so it would be credited