Question

Share Issuances for Cash Chase, Inc., issued 10,000 shares of $20 par value preferred stock at $50 per share and 8,000 shares of no-par value common stock at $20 per share. The common stock has no stated value. All issuances were for cash. a. Prepare the journal entries to record the share issuances. b. Prepare the journal entry for the issuance of the common stock assuming that it had a stated value of $10 per share. c. Prepare the journal entry for the issuance of the common stock assuming that it had a par value of $2 per share.

Answer 1

Answer and Explanation:

a. Cash $500,000 (10,000 shares × $50)

To Preferred stock $200,000 (10,000 shares × $20)

To Paid in capital in excess of par- preferred $300,000

(10,000 shares × $30)

(Being the Issuance of the shares of preferred stock is recorded)

Cash $160,000 (8,000 shares × $20)

To Common stock $160,000

(Being the Issued shares of no par value common stock is recorded)

b. Cash $160,000 (8,000 shares × $20)

To Common stock $80,000 (8,000 shares × $10)

To Paid in capital in excess of par stated- common $80,000

(8,000 shares × $20)

(Issued shares of no par value common stock, stated value)

c. Cash $160,000 (8,000 shares × $20)

To Common stock $16,000 (8,000 shares × $2)

To Paid in capital in excess of par - Common $144,000 (8,000 shares × $18)

(Being the Issued shares of common stock is recorded)