Question

Prepare the journal entry to record Jevonte Company’s issuance of 36,000 shares of its common stock assuming the shares have a:

1. $2 par value and sell for $18 cash per share.
2. $2 stated value and sell for $18 cash per share.

1. Record the issuance of 36,000 shares of common stock assuming the shares have a $2 par value and sell for $18 cash per share.

2. Record the issuance of 36,000 shares of common stock assuming the shares have a $2 stated value and sell for $18 cash per share.

Answer 1

Journal Entries:

1
General Journal	Debit	Credit
Cash	$648,000
Common Stock		$72,000
Additional Paid In Capital		$576,000
2
General Journal	Debit	Credit
Cash	$648,000
Common Stock		$72,000
Additional Paid In Capital		$576,000

Notes:

Issuance of par-value common stock for cash:

1. Debit Cash account for the amount of proceeds received from the issuance of common stock.
2. Credit Common Stock account for the par value of the common stock issued (i.e., par value x number of shares issued).
3. Credit Paid-in Capital in Excess of Par Value for the amount of proceeds received above the par value (i.e., Cash – Common Stock; (sales price – par value) x number of shares issued).

Issuance of no-par value common stock for cash:

1. Stated Value: journal entries similar to the par-value common stock
   1. Debit Cash account for the amount of proceeds from the issuance of common stock.
   2. Credit Common Stock account for the stated value of the common stock issued (i.e., stated value x number of shares issued).
   3. Credit Paid-in Capital in Excess of Stated Value for the amount of proceeds above stated value (i.e., Cash – Common Stock; (sales price – stated value) x number of shares issued).