Question

Prepare the issuer’s journal entry for each of the following separate transactions.

Answer 1

Answer:

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

(To record the issuance of common stock)