Answer:
Debit Cash or Bank Account $1,320,000
Credit Share Capital Account $132,000
Credit Share Premium Account $1,188,000
Explanation:
The journal entry to record issue of common stock for more than its par value will be as follows:
Debit Cash or Bank Account
(33,000 shares × $40 per share) $1,320,000
Credit Share Capital Account
(33,000 shares × $4 par value per share) $132,000
Credit Share Premium Account
(33,000 shares × ($40 - $4)per share) $1,188,000
Share capital account is always credited for issuance of shares at par value and the difference between par value and issuance value is taken to the share premium account. Here, the company issued its shares at $36 per share premium.
