Question

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

A corporation issued 9,000 shares of $30 par value common stock for $324,000 cash.

A corporation issued 4,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $58,500. The stock has a $1 per share stated value.

A corporation issued 4,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $58,500. The stock has no stated value.

A corporation issued 2,250 shares of $100 par value preferred stock for $283,500 cash.

PROBLEM 2

Rodriguez Corporation issues 7,000 shares of its common stock for $156,000 cash on February 20. Prepare journal entries to record this event under each of the following separate situations.
  

The stock has a $18 par value.

The stock has neither par nor stated value.

The stock has a $9 stated value.

Answer 1

Problem 1

9000 Shares issue at Par value of $30
Cash	$        3,24,000.00
Common Stock		$        2,70,000.00
Paid in Capital in excess of Par value-Common Stock		$            54,000.00
(Common Stock issued)
No par shares issued with stated value of 1
Preliminary expenses	$           58,500.00
Common Stock		$              4,500.00
Paid in Capital in excess of Stated value-Common Stock		$            54,000.00
(common stock issued)
No par or stated shares issued
Preliminary expenses	$           58,500.00
Common Stock		$            58,500.00
(Common Stock issued)
Preferred stock Issue
Cash	$        2,83,500.00
Preferred stock		$        2,25,000.00
Paid in Capital in excess of Par value-Preferred stock		$            58,500.00
(Preferred stock issued)

Problem 2

Situation 1-Common stock issue at Par value of $8
Cash	$        1,56,000.00
Common Stock		$            56,000.00
Paid in Capital in excess of Par value-Common Stock		$        1,00,000.00
(Common Stock issued)
Situation 2-Common stock issue at no par or stated value
Cash	$        1,56,000.00
Common Stock		$        1,56,000.00
(common stock issued)
Situation 3-Common Stock issued at Stated value of $9
Cash	$        1,56,000.00
Common Stock		$            63,000.00
Paid in Capital in excess of Stated value-Common Stock		$            93,000.00
(Common Stock issued)

Explanation

When shares are issued at neither par nor stated value then whole proceeds from issue are credited to Common stock account.

When stated value is given and Par value is not given then common stock is credited with stated value and difference is credited to Paid in capital in excess of Stated value.