Question

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

Answer 1

Answer: PLease find answers in explanation column

Explanation:

1. Being issued for common stock at $20 par value

Account                                     Debit                         Credit

Cash                                      $96,000

Common stock  at $20 par value (4000 x 20)            $80,000

Paid in excess capital of par Common stock               $16,000

($96,000 - $80,000)                                                    

2. Being issued for stated stock at $1 to promoters

  Account                                     Debit                         Credit

0rganisation expenses              $20,500                

Common stock  at $1 stated  value (2000 x 1)              $2,000

Paid in excess capital of par Common stock

($20,500 - $2,000                                                           $18,500

3. Being issued to promoters at no stated value

Account                                     Debit                         Credit

Organization expenses           $20,500

Common stock, no-par value                                      $20,500    

4. Being issued at preferred stock of $50 par value  

Account                                     Debit                         Credit

Cash                                        $242,500                  

Preferred stock  at $50 par value (1000 x 50)              $50,000

Paid in excess capital of par Preferred stock

($242,500  - $50,000)                                                      $192,500