Question

Prepare journal entries to record each of the following four separate issuances of stock. A corporation issued 7,000 shares of $10 par value common stock for $84,000 cash. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $55,000. The stock has a $2 per share stated value. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $55,000. The stock has no stated value. A corporation issued 1,750 shares of $50 par value preferred stock for $142,500 cash.

Answer 1

Answer:

The Journal entries are as follows:

(i) cash  A/c           Dr. $84,000

To Common stock, $10 par value      $70,000

To Paid-in capital in excess of par value, Common stock   $14,000

(To record the  issuance of stock)

(ii) Organization expenses  A/c           Dr. $55,000

To Common stock, $2 stated value                                    $7,000

To Paid-in capital in excess of stated value, Common stock   $48,000

(To record the  issuance of stock)

(iii) Organization expenses A/c    Dr. $55,000

To Common stock, no-par value                       $55,000

(To record the  issuance of stock)

(iv) Cash A/c                    Dr. $142,500

To Preferred stock, $50 par value[1,750 × $50)                  $87,500

To Paid-in capital in excess of par value, preferred stock  $55,000

(To record the  issuance of stock)