Question

Prepare journal entries to record each of the following four separate issuances of stock. A corporation issued 2,000 shares of $10 par value common stock for $24,000 cash. A corporation issued 1,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $52,000. The stock has a $5 per share stated value. A corporation issued 1,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $52,000. The stock has no stated value. A corporation issued 500 shares of $75 par value preferred stock for $89,500 cash.

Answer 1

Answer:

A. Dr Cash $24,000

Cr common stock $20,000

Cr paid in capital in excess of par-value common stock $4,000

B. Dr organization Expense $52,000

Cr common stock $5,000

Cr paid in capital in excess of par-value common stock $47,000

C. Dr organization expense $52,000

Cr Common Stock $52,000

D. Dr Cash $89,500

Cr Preferred stock $37,500

Cr paid in capital in excess of par-value common stock $52,000

Explanation:

Preparation of the journal entries to record each of the following four separate issuances of stock

A. Dr Cash $24,000

Cr common stock $20,000

(2000*10)

Cr paid in capital in excess of par-value common stock $4,000

($24,000-$20,000)

B. Dr organization Expense $52,000

Cr common stock $5,000

(1,000*$5)

Cr paid in capital in excess of par-value common stock $47,000

($52,000-$5,000)

C. Dr organization expense $52,000

Cr Common Stock $52,000

D. Dr Cash $89,500

Cr Preferred stock $37,500

(500*$75)

Cr paid in capital in excess of par-value common stock $52,000

($89,500-$37,500)