Question

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

1. A corporation issued 7,000 shares of $20 par value common stock for $168,000 cash.

2. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $21,500. The stock has a $1 per share stated value.

3. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $21,500. The stock has no stated value.

4. A corporation issued 1,750 shares of $25 par value preferred stock for $65,250 cash.

Answer 1

Solution -

Transaction General Journal Cash Common stock, $20 par value Paid-in capital in excess of par value, common stock Debit (In $) Credit (In $) 168000 140000 28000 21500 Organization expenses Common stock, $1 stated value Paid-in capital in excess of stated value, common stock 3500 18000 21500 Organization expenses Common stock, no-par value 21500 65250 Cash Preferred stock, $25 par value Paid-in capital in excess of par value, common stock 43750 21500

Answer 2

All correct with the exception of a small detail.. Question 4- last entry is 'paid in capital in excess of par value, preferred stock'. Not common stock.