Question

Prepare journal entries to record the following four separate issuances of stock.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1.  Cash A/c Dr $35,000        

           To Common Stock $20,000          (4,000 shares  × $5)

           To  Additional Paid-in Capital in excess of par - Common Stock $15,000

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

2. Promotion expenses A/c Dr $40,000

             To Common Stock $2,000          (2,000 shares  × $1)

             To  Additional Paid-in Capital in excess of par - Common Stock $15,000

(Being the issuance of stock is recorded to promoters and the remaining balance is credited to the additional paid-in capital account)

3. Promotion expenses A/c Dr $40,000

             To Common Stock $40,000

(Being the shares are issued to promoters)

4.  Cash A/c Dr $60,000

           To Preferred Stock $50,000          (1,000 shares  × $50)

           To  Additional Paid-in Capital in excess of par - Preferred Stock $10,000

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)