On may 10, marigold corp. issues 2,100 shares of $5 par value common stock for cash at $17 per share. The issuance of the stock is $25,200.
On May 10,
The debited cash amount is $17 × 2100 shares = $35,700
The credited common stock is $2100 × $5 = $10,500
The common stock amount paid in capital in excess of par value is
⇒2100 × ($17 - $5)
⇒ 2100 × $12
⇒$25,200
To record the issue of common stock is $25,200.
Basic concepts-
Common stock: Common stock is a type of investment that represents ownership in an organization. Owners of common stock elect the board of directors and vote on business policies.
Journal entry: The accounting cycle begins with journal entries. They are used to document every event and business transaction in a company's accounting records.
Par value: A bond's par value is equal to its face value. The par value of a bond or fixed-income instrument is important because it determines the maturity price and the frequency of coupon payments.
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