Question

On May 10, Paige Corporation issues 2,500 shares of $5 par value common stock for cash at $13 per share.

Journalize the issuance of the stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
May 10

Answer 1

Concepts and reason

Common Stock: It represents the money invested by the stockholders in the business. These shares will have voting rights. The stockholders can exercise these voting rights in the stockholders meeting and they have the right to receive the dividend, only if sufficient profits are available after paying preferred stockholders.

In case of liquidation, preference shareholders will be paid first and then common stockholders will be paid.

Fundamentals

Journal entry: Journalizing is the process of recording the transactions from the source documents into a record called Journal. These transactions are recorded in the order of their date. Journal entry is used to record occurrence of the transaction.

Par value:

Par value of shares means the stock value given by the corporation in its corporate charter. It is also known as face value or nominal value. This value will appear on the stock certificate issued to the stockholder.

Prepare the journal entry to record the issuance of common stock as shown below:

Ans: