Question

During its first year of operations, Foyle Corporation had the following transactions pertaining to its common stock. Jan. 10 Issued 71,000 shares for cash at $7 per share. July    1 Issued 38,000 shares for cash at $8 per share.

Journalize the transactions, assuming that the common stock has a par value of $7 per share. Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share.

Answer 1

case 1-  common stock has a par value of $7 per share.

Jan 10

Cash debit (71000 x 7) 497000

Common stock Credit (71000 x 7) 497000

(to record issuance of stock of 71000 shares of $ 7 par value common stock at $7 per share)

July 1

Cash debit (38000 x 8) 304000

Common stock Credit (38000 x 7) 266000

Paid in capital excess par value (38000 x 1) 38000

(to record issuance of stock of 38000 shares of $ 7 par value common stock at $8 per share)

case 2- common stock has a par value of $1 per share.

Jan 10

Cash debit (71000 x 7)   497000

Common stock Credit (71000 x 1) 71000

Paid in capital excess par value (71000 x 6) 426000

(to record issuance of stock of 71000 shares of $ 1 par value common stock at $7 per share)

July 1

Cash debit (38000 x 8) 304000

Common stock Credit (38000 x 1) 38000

Paid in capital excess par value (38000 x 7) 266000

(to record issuance of stock of 38000 shares of $ 1 par value common stock at $8 per share)