required information\n(the following information applies to the questions displayed below.)\nfollowing are…

required information\n(the following information applies to the questions displayed below.)\nfollowing are the issuances of stock transactions.\n1. a corporation issued 5,000 shares of $20 par - value common stock for $120,000 cash.\n2. a corporation issued 2,500 shares of no - par common stock to its promoters in exchange for their efforts, estimated to be worth $32,500. the stock has a $1 per share stated value.\n3. a corporation issued 2,500 shares of no - par common stock to its promoters in exchange for their efforts, estimated to be worth $32,500. the stock has no stated value.\n4. a corporation issued 1,250 shares of $50 par - value preferred stock for $95,000 cash.\nprepare journal entries to record each of the following four separate issuances of stock.\njournal entry worksheet\nrecord the issue of 5,000 shares of $20 par - value common stock for $120,000 cash.

required information\n(the following information applies to the questions displayed below.)\nfollowing are the issuances of stock transactions.\n1. a corporation issued 5,000 shares of $20 par - value common stock for $120,000 cash.\n2. a corporation issued 2,500 shares of no - par common stock to its promoters in exchange for their efforts, estimated to be worth $32,500. the stock has a $1 per share stated value.\n3. a corporation issued 2,500 shares of no - par common stock to its promoters in exchange for their efforts, estimated to be worth $32,500. the stock has no stated value.\n4. a corporation issued 1,250 shares of $50 par - value preferred stock for $95,000 cash.\nprepare journal entries to record each of the following four separate issuances of stock.\njournal entry worksheet\nrecord the issue of 5,000 shares of $20 par - value common stock for $120,000 cash.

Answer

Explanation:

Step1: Transaction 1 - Calculate par - value amount

The par - value of common stock = Number of shares × Par value per share. For 5,000 shares of $20 par - value common stock, the par - value amount is $5000\times20=$100000$. The cash received is $120,000. The excess of cash over par value is $120000 - 100000=$20000$. The journal entry is:

Transaction General Journal Debit Credit
1 Cash $120,000
Common Stock, $20 par value $100,000
Paid - in Capital in Excess of Par - Common Stock $20,000

Step2: Transaction 2 - Calculate stated - value amount

The stated - value of common stock = Number of shares × Stated value per share. For 2,500 shares of $1 stated - value common stock, the stated - value amount is $2500\times1=$2500$. The value of promoters' efforts is $32,500. The excess of the value of promoters' efforts over the stated value is $32500 - 2500=$30000$. The journal entry is:

Transaction General Journal Debit Credit
2 Organization Expenses $32,500
Common Stock, $1 stated value $2,500
Paid - in Capital in Excess of Stated Value - Common Stock $30,000

Step3: Transaction 3 - No - par, no stated - value

Since the stock has no par and no stated value, the entire value of the promoters' efforts is credited to the common stock account. The journal entry is:

Transaction General Journal Debit Credit
3 Organization Expenses $32,500
Common Stock $32,500

Step4: Transaction 4 - Calculate par - value amount

The par - value of preferred stock = Number of shares × Par value per share. For 1,250 shares of $50 par - value preferred stock, the par - value amount is $1250\times50=$62500$. The cash received is $95,000. The excess of cash over par value is $95000 - 62500=$32500$. The journal entry is:

Transaction General Journal Debit Credit
4 Cash $95,000
Preferred Stock, $50 par value $62,500
Paid - in Capital in Excess of Par - Preferred Stock $32,500

Answer:

Transaction General Journal Debit Credit
1 Cash $120,000
Common Stock, $20 par value $100,000
Paid - in Capital in Excess of Par - Common Stock $20,000
2 Organization Expenses $32,500
Common Stock, $1 stated value $2,500
Paid - in Capital in Excess of Stated Value - Common Stock $30,000
3 Organization Expenses $32,500
Common Stock $32,500
4 Cash $95,000
Preferred Stock, $50 par value $62,500
Paid - in Capital in Excess of Par - Preferred Stock $32,500