Question

Exercise 13-2 Accounting for par, stated, and no-par stock issuances LO P1 Rodriguez Corporation issues 10,000 shares of its common stock for $40,800 cash on February 20. Prepare journal entries to record this event under each of the following separate situations. The stock has a $2 par value. The stock has neither par nor stated value. The stock has a $1 stated value.

Answer 1

Answer:

Entries under 2$ par value.

Dr Cash   (2*10000)     20000

            Cr Share capital                                     20000

            Cr Share premium (40800-20000)      20800

         (To record share issue in excess of par and when par is at $2)

Entries under 1$ par value

    Dr   Cash (1 * 10000)                         10000

   Dr Share discount (40800-10000)   30800  

                    Cr Share capital                             40800

        ( To record share issue at discount )