The journal entry records the transaction by debiting the corporate expense by $2,800 and crediting the common stock by $1,000 with the remaining amount transferred to additional capital as $1,800.
Journal entry is passed in the accounting books to record the financial transactions made by a company. It shows a dual effect on every transaction where one account is debited and another account is credited.
The charge from the accountant is an expense for the company, that is, $2,800, the issue of common stock for payment is the equity of the company, that is, $1,000 and the excess amount left should be treated as additional capital in excess of par, that is, $1,800.
The journal entry is as follows:
Particulars Debit Amount Credit Amount
Corporate expenses $2,800
Common stock (200 shares X $5 ) $1,000
Additional capital ($2,800-$1,000) $1,800
Therefore, the journal entry is passed by making a debit of $2,800 to corporate expenses and a credit of $1,000 in common stock as well as $1,000 in additional capital.
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