Question

Osage Corporation issued 2,000 shares of common stock. Prepare the entry for the issuance under the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,675. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) The stock had a par value of $5 per share and was issued for a total of $52,000. (b) The stock had a stated value of $5 per share and was issued for a total of $52,000. (c) The stock had no par or stated value and was issued for a total of $52,000.

Answer 1

Answer:

Osage Corporation

Journal Entries for the Issuance of 2,000 Shares under the following assumptions:

(a) The stock had a par value of $5 per share and was issued for a total of $52,000.

Debit Cash Account $52,000

Credit Common Stock $10,000

Credit Additional Paid-in Capital $42,000

To record the issuance of 2,000 shares of Common Stock, par $5 for a total of $52,000.

(b) The stock had a stated value of $5 per share and was issued for a total of $52,000:

Debit Cash Account $52,000

Credit Common Stock $10,000

Credit Additional Paid-in Capital $42,000

To record the issuance of 2,000 shares of Common Stock, stated value of $5 for a total of $52,000.

(c) The stock had no par or stated value and was issued for a total of $52,000.

Debit Cash Account $52,000

Credit Common Stock $52,000

To record the issuance of 2,000 shares of Common Stock, with no par, for a total of $52,000.

Explanation:

Shares can be issued at par and above the par value.  A stated value is an amount assigned to a corporation's stock for internal accounting purposes when the stock has no par value.  Like par value, stated value is nominal, typically between $0.01 and $1.00.

If no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital.