Question

On March 1, Atlantic Co. issues 47,500 shares of $4 par value common stock for $312,500 cash. On April 1, OP Co. issues no-par value common stock for $80,000 cash. On April 6, MPG issues 3,000 shares of $15 par value common stock for $49,000 of inventory, $150,000 of machinery, and acceptance of a $99,000 note payable.

Answer 1

Common stock is a security that represents ownership in a corporation.

The Journal entries are as follows:

(i) On March 1,

Cash A/c       Dr. $297,500

To common stock (42,500 × $4)       $170,000          

To paid in capital in excess of par value $127,500

(To record the issuance of common stock)

(ii) On April 1,

Cash A/c       Dr. $70,000

To common stock         $70,000

(To issue no-par value common stock)

(iii) On April 6,

Inventory A/c  Dr. $45,000

Machinery A/c  Dr. $145,000

To common stock (2,000 × $25)       $50,000          

To paid in capital in excess of par value $46,000

To Note payable                     $94,000

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