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Clothing Frontiers began operations on January 1 and engages in the following transactions during the year related to stockholders' equity.

January 1 Issues 700 shares of common stock for $50 per share.
April 1 Issues 110 additional shares of common stock for $54 per share.

Required:
a. Record the transactions, assuming Clothing Frontiers has no-par common stock.
b. Record the transactions, assuming Clothing Frontiers has either $1 par value or $1 stated value common stock.

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Answer:

A. Jan-01

Dr Cash 35,000

Cr Common stock 35,000

Apr-01

Dr Cash 5,940

Cr Common stock 5,940

B. Jan-01

Dr Cash 35,000

Cr Common stock700

Cr Additional paid-in capital 34,300

Apr-01

Dr Cash 5,940

Cr Common stock110

Cr Additional paid-in capital 5,830

Explanation:

a. Preparation of the journal entry to Record the transactions, assuming Clothing Frontiers has no-par common stock.

Jan-01

Dr Cash 35,000

(700 shares*$50 per share)

Cr Common stock 35,000

Apr-01

Dr Cash 5,940

Cr Common stock 5,940

(110*$54 per share)

b. Preparation of the journal entry to Record the transactions, assuming Clothing Frontiers has either $1 par value or $1 stated value common stock.

Jan-01

Dr Cash 35,000

(700 shares*$50 per share)

Cr Common stock700

Cr Additional paid-in capital 34,300

(35,000-700)

Apr-01

Dr Cash 5,940

(110*$54 per share)

Cr Common stock110

Cr Additional paid-in capital 5,830

(5,940-110)

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