Chapter 15: Question 1E (page 812)

(Recording the Issuances of Common Stock) During its first year of operations, Collin Raye Corporation had the following transactions pertaining to its common stock.
Jan. 10 Issued 80,000 shares for cash at $6 per share.
Mar. 1 Issued 5,000 shares to attorneys in payment of a bill for
$35,000 for services rendered in helping the company to
incorporate.
July 1 Issued 30,000 shares for cash at $8 per share.
Sept. 1 Issued 60,000 shares for cash at $10 per share.
Instructions
Prepare the journal entries for these transactions, assuming that the common stock has a par value of $5 per share.
Prepare the journal entries for these transactions, assuming that the common stock is no-par with a stated value of $3 per share.

Short Answer

Expert verified

Issuing a share requires a company to pass a journal entry such that the cash account is debited and the common stock account is credited.

Step by step solution

Meaning of Shares

Shares are regarded as one of the finest long-term investments, outperforming property, corporate bonds, government bonds, and other asset classes. This helps the investor for investing their money in the long term.

Preparing Journal Entries assuming that the Common Stock has a par value of $5 per share.

Date	Particular	Folio	Debit $	Credit $
January 10	Cash A/c		480,000
	Common stock			400,000
	Paid-in Capital in excess of par Common stock A/c			80,000
	To record the issue of share.

March 1	Organizational Expense A/c		35,000
	Common stock			25,000
	Paid-in Capital in excess of par Common stock A/c.			10,000
	To record the issue of share.

July 1	Cash A/c.		240,000
	Common stock			150,000
	Paid-in Capital in excess of par Common stock A/c.			90,000
	To record the issue of share.

September 1	Cash A/c.		600,000
	Common stock			300,000
	Paid-in Capital in excess of par Common stock A/c.			300,000
	To record the issue of share.

Preparing Journal Entries assuming that the Common Stock is no-par with a stated value of $3 per share.

Date	Particular	Folio	Debit $	Credit $
January 10	Cash A/c.		480,000
	Common stock			240,000
	Paid-in Capital in excess of par Common stock A/c.			240,000
	To record the issue of share.

March 1	Organizational Expense A/c		35,000
	To Common stock			15,000
	To Paid-in Capital in excess of stated Value Common stock A/c			20,000
	To record the issue of share.

July 1	Cash A/c		240,000
	Common stock			90,000
	Paid-in Capital in excess of stated value common stock A/c			150,000
	To record the issue of share.

September 1	Cash A/c		600,000
	Common stock			180,000
	Paid-in Capital in excess of stated value -Common stock A/c			420,000
	To record the issue of share.

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Short Answer

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Meaning of Shares

Preparing Journal Entries assuming that the Common Stock has a par value of $5 per share.

Preparing Journal Entries assuming that the Common Stock is no-par with a stated value of $3 per share.

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