Question

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

a. A corporation issued 4,000 shares of $10 par value common stock for $48,000 cash.
b. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
c. The stock has a $3 per share stated value.A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $57,000.
d. The stock has no stated value.A corporation issued 1,000 shares of $50 par value preferred stock for $107,000 cash.

Answer 1

a.

DR Cash $48,000

CR Common Stock (4,000*10) $40,000

CR Paid in Excess of Par- Common Stock $8,000

(To record common stock issued for cash)

Working

Paid in Excess of Par- Common Stock = 48,000- 40,000

= $8,000

b.No stated value

DR Organization expenses $57,000

CR Common Stock $57,000

(To record common stock issued to promoters)

c.

DR Organization expenses $57,000

CR Common Stock (2,000 * $3) $6,000

CR Paid in Excess of Par- Common Stock $51,000

(To record common stock issued to promoters)

Working

Paid in Excess of Par- Common Stock = 57,000 - 6,000

= $51,000

d.

DR Cash $107,000

CR Preferred Stock (1,000*50) $50,000

CR Paid in Excess of Par- Preferred Stock $57,000

(To record preferred stock issued for cash)

Working

Paid in Excess of Par- Preferred Stock

= 107,000 - 50,000

= $57,000