Question

A corporation sold 19,000 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

Answer 1

The transaction will be recorded as,

Cash $247000 Dr

Common Stock $190000 Cr

Paid in Capital in excess of par-Common Stock $57000 Cr

Step-by-step explanation:

The entry to record the issuance of common stock against cash at a price higher than par will require a debit to the cash account which is an asset and is increasing as a result of the transaction. The debit will be for the amount for which shares are being issued.

Cash = 13 * 19000 = $247000

The credit part of the entry will contain a credit to common stock for the amount of par value.

Common stock = 10 * 19000 = $190000

The remaining will be credited to a separate account which is a reserve account and which will be credited as a result of issuing for more than par.

3 * 19000 = $57000