Question

Prepare journal entries to record the following four separate issuances of stock. A corporation issued 9,000 shares of $10 par value common stock for $108,000 cash. A corporation issued 4,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $49,500. The stock has a $1 per share stated value. A corporation issued 4,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $49,500. The stock has no stated value. A corporation issued 2,250 shares of $25 par value preferred stock for $105,750 cash.

Answer 1

Answer: Please see answer in explanation column

Step-by-step explanation:

1. Being issued in excess of par value

Account titles & Explanations Debit Credit

Cash $108,000

Common stock(9,000 x 10) $90,000

paid in capital in excess of par value

Common Stock(108,000 - 90,000) $18,000

2.Being issued to promoters at stated value

Account titles & Explanations Debit Credit

Organisational expense $49,500

common stock (4500 x 1 ) $4,500

paid in capital in excess of stated value

Common stock (49,500 -4,500) $45,000

3 Being issued to promoters at no stated value

Account titles & Explanations Debit Credit

organisational expense $49,500

Common stock of no par value $49,500

4 Being issued of preferred shared in excess of par value

Account titles & Explanations Debit Credit

Cash $105,750

Preferred Stock(2,250 X $25) $56,250

paid in capital in excess of par value

of preferred stock ( $105,750- $56,250) $49,500