Answer:
Assuming it is par value stock, the journal entries required would be:
Dr Cash $60,000
Cr Common stock $3,000
Cr Paid-in capital in excess of par $57,000
Assuming it is not a par value stock , the journal entries would be as follows:
Dr Cash $60,000
Cr Common stock $60,000
Explanation:
In both instances, the cash realized from the issue is $60,000(3000*$20), which implies that cash has increased by $60000, hence the need to debit cash account in both cases.
In the first, the common stock account is credited with $3000(number of shares multiplied by par value per share) and the paid-in capital is credited with $57000($20-$1 *3000) to record the excess paid over the par value.
Lastly, the split of the price into par and premium amount does not apply in the second scenario.
