Question

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

1. A corporation issued 6,000 shares of $20 par value common stock for $144,000 cash.
2. A corporation issued 3,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $36,000. The stock has a $1 per share stated value.
3 .A corporation issued 3,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $36,000. The stock has no stated value.
4. A corporation issued 1,500 shares of $75 par value preferred stock for $148,500 cash.

Answer 1

Answer and Explanation:

The Journal Entry is shown below:-

1. Cash Dr, $144,000

To Common stock $20 par value $120,000

(6,000 × $20)

To paid in capital in excess of par value, common stock $24,000

(Being shares issued is excess of par value is recorded)

2. Organization expenses Dr, $36,000

To Common stock $1 par value $3,000

To Paid in capital in excess of stated value, common stock $33,000

(Being issue of shares to promoters at stated value is recorded)

3. Organization expenses Dr, $36,000

To Common stock par value $36,000

(Being issue of shares to promoters has no stated value is recorded)

4. Cash Dr, $148,500

To Preferred stock $75 par value $112,500

(1,500 × $75)

To Paid in capital excess of par value, preferred stock $36,000

(Being issue of preference shares in excess of par value is recorded)