Question

On May 1, 2016, Antonelli Corporation received a subscription from Angelina Paz for 520 shares of
its $1 par-value common stock at a price of $26 a share.

      Paz made a payment of $13.00 per share on the stock at the time of the subscription.

  

Prepare the journal entries to record receipt of the subscription and the cash payment.

Answer 1

Solution :

When a stock subscription is made , receivables account is debited and stock subscription account is credited.

The journal entry would be :

Stock subscription receivable debit - $ 13,520

Common stocks subscribed credit - $ 13,520

( $26 * 520 shares)

When payment for the subscription is received the entry would be

Cash. debit. - $ 6760

Stock subscription receivable credit - $ 6760.

( $13 * 520 shares)

Since the part payment is done, the subscription receivable account will show a debit balance of the remaining amount to be receiving later.

Along with this a entry is passed to move the amount recorded in the common stock subscribed account to the common stock account

The entry would be:

Common stock subscribed debit - $6760

Common stock Account credit-$6760

Since only part payment is done only that part is transferred.