Question

Prepare journal entries to record the following four separate issuances of stock. A corporation issued 10,000 shares of $20 par value common stock for $240,000 cash. A corporation issued 5,000 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. A corporation issued 5,000 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. A corporation issued 2,500 shares of $25 par value preferred stock for $98,500 cash.

Answer 1

Answer: Please see explanation column for answers

Step-by-step explanation:

Accounts and explanation Debit Credit

1 Cash $240,000

Common Stock (10,000 X 20) $200,000

Paid in Excess of Par- Common Stock

($240,000- 200,000) $ 40,000

(Being common shares issued for cash)

2. Organisation Expenses $36,000

Common Stock (5000x1) $5000

Paid in Excess of Par- Common Stock = 36,000-5000 $31,000

(Being common shares issued to promoters)

3 Organisation Expenses $36,000

Common Stock $36000

Since There is no stated value, paid in excess of par will not be calculated

4 Cash $98,500

Preferred Stock (2500 x 25) $62,500

Paid in Excess of Par- Preferred Stock

(98,500- 62,500) $36,000

(Being preferred shares issued for cash)