Question

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

1. A corporation issued 4,000 shares of $5 par value common stock for $35,000 cash.
2. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,000. The stock has a $1 per share stated value.
3. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $40,000. The stock has no stated value.
4. A corporation issued 1,000 shares of $50 par value preferred stock for $60,000 cash.

Answer 1

Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	-----	Cash	$35,000
		Common Stock (4000 Shares X $ 5)		$20,000
		Paid in Capital in excess of par - Common Stock		$15,000
		(Record the issue of Common stock)
2	-----	Goodwill	$40,000
		Common Stock (2,000 Shares X $ 1)		$2,000
		Paid in Capital in excess of par - Common Stock		$38,000
		(Record the issue of Common stock to prmoters)
3	-----	Goodwill	$40,000
		Common Stock		$40,000
		(Record the issue of Common stock to prmoters)
		Cash	$60,000
4	-----	Preferred Stock(1000 Shares X $ 50)		$50,000
		Paid in Capital in excess of par - Preferred Stock		$10,000
		(Record the issue of PReferred stock)