Question

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

1. A corporation issued 8,000 shares of $20 par value common stock for $192,000 cash.
2. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $33,000. The stock has a $1 per share stated value.
3. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $33,000. The stock has no stated value.
4. A corporation issued 2,000 shares of $75 par value preferred stock for $183,000 cash.

Answer 1

1.

DR Cash $192,000

CR Common stock. $160,000

CR Paid-in capital in excess of par value - Common stock $32,000

Working

Common Stock = $20 * 8,000

= $160,000

Paid-in capital in excess of par value - Common stock = 192,000 - 160,000

= $32,000

2

DR Organization expenses $33,000

CR Common stock, $4,000

CR Paid-in capital in excess of stated value - common stock $29,000

Working

Common Stock = 1 * 4,000

= $4,000

Paid-in capital in excess of stated value, common stock = 33,000 - 4,000

= $29,000

3

DR Organization expenses $33,000

CR Common stock $33,000

4

DR Cash $183,000

CR Preferred stock $150,000

CR Paid-in capital in excess of par value - preferred stock $33,000

Working

Preferred Stock = 75 * 2,000

= $150,000

Paid-in capital in excess of par value - preferred stock = 183,000 - 150,000

= $33,000