Question

A corporation issues 2,550 shares of common stock for $81,600. The stock has a stated value...

A corporation issues 2,550 shares of common stock for $81,600. The stock has a stated value of $17 per share. What amount of credit to Common Stock would the journal entry to record the stock issuance include?

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Answer #1
Ans. Common stock are always recorded on its par or stated value.
The following journal entry will be recorded for this transaction :
Transaction General Journal Debit Credit
1 Cash $81,600
Common stock $43,350
Paid in capital in excess of stated value $38,250
(Common shares issued on excess of stated value)
*Common stock = Number of shares issued * Stated value
2,550 * $17
$43,350
*Paid in capital in excess of par = Cash - Common stock
$81,600 - $43,350
$38,250
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