Question

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

a. A corporation issued 4,000 shares of $20 par value common stock for $96,000 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 $20,500. The stock has a $1 per share stated value.
c. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $20,500. The stock has no stated value.
d. A corporation issued 1,000 shares of $50 par value preferred stock for $242,500 cash.

Answer 1

Answer: PLease find answers in explanation column

Step-by-step explanation:

1. Being issued for common stock at $20 par value

Account Debit Credit

Cash $96,000

Common stock at $20 par value (4000 x 20) $80,000

Paid in excess capital of par Common stock $16,000

($96,000 - $80,000)

2. Being issued for stated stock at $1 to promoters

Account Debit Credit

0rganisation expenses $20,500

Common stock at $1 stated value (2000 x 1) $2,000

Paid in excess capital of par Common stock

($20,500 - $2,000 $18,500

3. Being issued to promoters at no stated value

Account Debit Credit

Organization expenses $20,500

Common stock, no-par value $20,500

4. Being issued at preferred stock of $50 par value

Account Debit Credit

Cash $242,500

Preferred stock at $50 par value (1000 x 50) $50,000

Paid in excess capital of par Preferred stock

($242,500 - $50,000) $192,500