Prepare journal entries to record each of the following four separate issuances of stock. A corporation issued 3,000 shares of $20 par value common stock for $72,000 cash. A corporation issued 1,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $22,000. The stock has a $1 per share stated value. A corporation issued 1,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $22,000. The stock has no stated value. A corporation issued 750 shares of $100 par value preferred stock for $97,000 cash

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andromache andromache · Answer 1 · 2020-05-17T15:39:07+02:00

Answer and Explanation:

The journal entries are shown below:

1. Cash $72,000

To common stock (3,000 shares × $20) $60,000

To Additional capital paid $12,000

(Being the issuance of the common stock is recorded)

For recording this we debited the cash as it increased the cash and credited the other two accounts as it increased the stockholder equity

2. Organisation expense Dr $22,000

To common stock (1,500 shares × $1) $1,500

To Additional capital paid $20,500

(Being the issuance of the common stock is recorded)

For recording this we debited the expense as it increased the expense and credited the other two accounts as it increased the stockholder equity

3. Organisation expense $22,000

To common stock $22,000

(Being the issuance of the common stock is recorded)

For recording this we debited the expense as it increased the expense and credited the common stock as it increased the stockholder equity

4. Cash $97,000

To preferred stock (750 shares × $100) $75,000

To Additional capital paid $22,000

(Being the issuance of the preferred stock is recorded)

For recording this we debited the cash as it increased the cash and credited the other two accounts as it increased the stockholder equity