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21 September, 06:01

Justin Corp. issues 10,000 shares of $1 par value common stock for $5 per share. The journal entry to record this transaction will include which of the following? (Check all that apply.)

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  1. 21 September, 06:15
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    The record of the issuance of the stock is debit to cash for $50,000, credit to common stock for $10,000 and credit to excess of common stock of $40,000.

    Explanation:

    A. Entries of the stock

    1. Account (cash)

    Cash=10,000 shares at $5 per share

    Cash=10,000*5=$50,000

    Cash to Debit=$50,000

    Credit this account=$0

    2. Account (common stock)

    Common stock=10,000 shares at $1 per value common stock

    Common stock=10,000*1=$10,000

    Credit account=$10,000

    Debit this account=$0

    3. Account (Paid-in Capital in Excess of Par - Common Stock)

    Paid in capital in excess of par-common stock=50,000-10,000=$40,000

    Credit this account=$40,000

    Debit this account=$0

    This can be written as;

    Account Debit ($) Credit ($)

    Cash (10,000 shares*$5 price) 50,000

    Common Stock (10,000 shares*$1 par) 10,000

    Paid-in Capital in Excess of Par - Common Stock 40,000

    The record of the issuance of the stock is debit to cash for $50,000, credit to common stock for $10,000 and credit to excess of common stock of $40,000.
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