Question

M11-4 Recording the sale of Common Stock LO11-3 To expand operations, Aragon Consulting issued 176,000 shares of previously unissued stock with a par value of $1. Investors purchased the stock for $17 per share. a. Sale of the above stock b. Sale of above stock if the par value was $2 per share Prepare journal entries for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Date	General Journal	Debit	Credit
a	Cash	2,992,000
	Common stock		176,000
	Paid in capital, in excess of par- common		2,816,000

Cash to be debited = Number of shares issued x Issue price of per share

= 176,000 x 17

= $2,992,000

Paid in capital, in excess of par- common - Common stock, to be credited = Number of shares issued x ( Issue price per share - Par value per share)

= 176,000 x (17-1)

= $2,816,000

Common stock to be credited = Number of shares issued x Par value of per share

= 176,000 x 1

= $176,000

Date	General Journal	Debit	Credit
b	Cash	2,992,000
	Common stock		352,000
	Paid in capital, in excess of par- common		2,640,000

Cash to be debited = Number of shares issued x Issue price of per share

= 176,000 x 17

= $2,992,000

Paid in capital, in excess of par- common - Common stock, to be credited = Number of shares issued x ( Issue price per share - Par value per share)

= 176,000 x (17-2)

= $2,640,000

Common stock to be credited = Number of shares issued x Par value of per share

= 176,000 x 2

= $352,000

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