Question

ICOT Industries issued 28 million of its $1 par common shares for $492 million on April 11. Legal, promotional, and accounting services necessary to effect the sale cost $3 million. Required: 1. Prepare the journal entry to record the issuance of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Dr Cash $492

Cr Common stock $28

Cr PIC in excess of par 464

Dr PIC in excess of par $3

Cr Cash $3

Step-by-step explanation:

Preparation of the Journal entry to record the issuance of the shares

Based on the information given we were told that the Industries issued 28 million of its $1 par common shares for the amount of $492 million on April 11 which means that the Journal entry will be:

Dr Cash $492

Cr Common stock $28

(28 million x $1)

Cr PIC in excess of par 464

($492-$28)

(To record the sale of the stock)

Based on the information given we were told that the Industries had Legal, promotional, and accounting services necessary to effect the sale cost of the amount of $3 million which means that the Journal entry will be:

Dr PIC in excess of par $3

Cr Cash $3

(To record the stock issue costs)