Question

Prepare journal entries to record the following four separate issuances of stock.

A. A corporation issued 7,000 shares of $10 par value common stock for $84,000 cash.
B. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $49,000. The stock has a $1 per share stated value.
C. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $49,000. The stock has no stated value.
D. A corporation issued 1,750 shares of $50 par value preferred stock for $136,500 cash.

Answer 1

Step-by-step explanation:

• A.

Debit Credit

Cash $84,000

Common stock $70,000

Paid-In Capital in Excess of Par Value $14,000

It's necessary to split the equity in two accounts because there is information about the par value

• B.

Promotion Expenses $49,000

Common Stock $3,500

Paid-In Capital in Excess of Par Value $45,500

It's necessary to split the equity in two accounts because there is information about the par value

• C

Promotion Expensese $49,000

Common Stock $49,000

It's not necessary to split the equity in two accounts because there is no information about the par value

• D.

Cash $136,500

Preferred Stock $87,500

Paid-In Capital in Excess of Par Value $49,000

It's necessary to split the equity in two accounts because there is information about the par value