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prohojiy [21]
2 years ago
9

During its first year of operations, Novak Corp. Had these transactions pertaining to its common stock. Jan. 10 Issued 26,000 sh

ares for cash at $4 per share. July 1 Issued 55,000 shares for cash at $9 per share. (a) Journalize the transactions, assuming that the common stock has a par value of $4 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $3 per share
Business
1 answer:
bonufazy [111]2 years ago
7 0

The journal entries to record the common stock transactions under the two scenarios are as follows:

a) Assuming that the common stock has a par value of $4 per share:

Jan. 10 Debit Cash $104,000

Common Stock $104,000

July 1 Debit Cash $495,000

Common Stock $220,000

Additional Paid-in Capital $275,000

b) Assuming that the common stock is no-par with a stated value of $3 per share

Jan. 10 Cash $104,000 Common Stock $78,000 Additional Paid-in Capital $26,000

July 1 Cash $495,000 Common Stock $165,000 Additional Paid-in Capital $330,000

<h3>What is the difference between par value and stated value?</h3>

There is <u>no major difference</u> between the par value and the stated value of the common stock, except as follows.

While the stated value is assigned when there is no par value for accounting purposes, the par value is assigned when the shares are authorized for issuance.

The two function as the face value of the shares which can be compared to the market value to discover if there is additional paid-in capital or not.

<h3>Data and Calculations:</h3>

a) Jan. 10 Cash $104,000 Common Stock $104,000

July 1 Cash $495,000 Common Stock $220,000 Additional Paid-in Capital $275,000

b) Jan. 10 Cash $104,000 Common Stock $78,000 Additional Paid-in Capital $26,000

July 1 Cash $495,000 Common Stock $165,000 Additional Paid-in Capital $330,000

Learn more about recording stock issuance transactions at brainly.com/question/17201601

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