Question

hen a company issues 37,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:

Answer 1

Answer:

Debit Cash Account $370,000

Credit Common Stock Account  $37,000

Credit Share Premium Account $333,000

Explanation:

Given a par value of $1, and an issue price of $10, the shares were issued at a premium of (10 - 1 = ) $9.

Therefore, the journal entry are as follows.

Debit Cash Account (37,000 * $10) = $370,000

Credit Common Stock Account (37,000 * $1) = $37,000

Credit Share Premium Account (37,000 * $9) = $333,000.