Question

When a company issues 32,000 shares of $5 par value common stock for $50 per share,...

When a company issues 32,000 shares of $5 par value common stock for $50 per share, the journal entry for this issuance would include:

Homework Answers

Answer #1

Number of shares issued = 32,000

Par value of 1 common share = $5

Issued price of 1 common share = $50

Cash will be debited by = Number of shares issued x Issued price of 1 common share

= 32,000 x 50

= $1,600,000

Common stock will be credited by = Number of shares issued x Par value of 1 common share

= 32,000 x 5

= $160,000

Paid in capital in excess of par - Common will be credited by = Number of shares issued x (Issued price of 1 common share - Par value of 1 common share)

= 32,000 x (50 - 5)

= 1,440,000

Journal

Account Title and Explanation

Debit

Credit

Cash 1,600,000
Common stock 160,000
Paid in capital in excess of par - Common 1,440,000

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