Question

ncentive Corporation was authorized to issue 12,000 shares of common stock, each with a $2 par value. During its first year, the following selected transactions were completed:

a.Issued 5,100 shares of common stock for cash at $21 per share.

b. Issued 1,100 shares of common stock for cash at $24 per share.
Prepare the journal entry required for each of these transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer and Explanation:

The journal entries are as follows

a. Cash A/c Dr $107,100         (5,100 shares × $21)

    To Common Stock $10,200         (5,100 shares × $2)

    To  Additional Paid-in Capital in excess of par - Common Stock $96,900

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

b.  Cash A/c Dr $26,400         (1,100 shares × $24)

    To Common Stock $2,200        (1,100 shares × $2)

    To  Additional Paid-in Capital in excess of par - Common Stock $24,200

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

It increased the both cash and common stock stock and the additional paid in capital account as well