Question

4)Tim issues 2,000 shares of its no-par common stock. The issue price of the stock is $18 per share. What is the journal entry required to record the issuance of the shares?

5) By what amount did this transaction affect Tim’s total shareholder equity? (show calculations)

6) By what amount did this transaction affect Tim’s net income for the year? (show calculations)

7) Bob issues common stock with a par value of $700 in exchange for equipment. The common stock has a fair value of $2,800. What is the journal entry required to record this transaction?

Answer 1

4)

Account Titles	Debit	Credit
Cash	$         36,000
Common Stock		$         36,000

5) Total Stockholder's Equity increases by $36000 i.e. 2000 x $18

6) There is no effect of this transaction on Net Income

7)

Account Titles	Debit	Credit
Equipment	$             2,800
Common Stock		$                  700
Paid in Capital in Excess of Par		$               2,100

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