prepare the journal entry to record zende companys issuance of 75,000 shares of $4 par - value common stock…
prepare the journal entry to record zende companys issuance of 75,000 shares of $4 par - value common stock assuming the shares sell for: a. $4 cash per share. b. $5 cash per share. journal entry worksheet: record the issuance of 75,000 shares of $4 par - value common stock assuming the shares sell for $4 cash per share. note: enter debits before credits. transaction general journal debit credit a.
Answer
Explanation:
Step1: Calculate cash received when selling at par
When shares sell at par ($4 per share), cash received = Number of shares × Par - value per share. Cash = 75000×4 = 300000. Debit the Cash account for the amount received and credit the Common - Stock account for the par - value of the issued shares.
Step2: Journal entry for selling at par
Debit: Cash $300000 Credit: Common Stock $300000
Step3: Calculate cash received when selling above par
When shares sell for $5 per share, cash received = 75000×5 = 375000. The par - value of the shares is 75000×4 = 300000. The excess of the issue price over the par - value is 375000 - 300000 = 75000. Debit the Cash account for the total amount received, credit the Common Stock account for the par - value of the issued shares, and credit the Paid - in Capital in Excess of Par account for the excess amount.
Step4: Journal entry for selling above par
Debit: Cash $375000 Credit: Common Stock $300000 Credit: Paid - in Capital in Excess of Par $75000
Answer:
a.
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| a | Cash | $300000 | |
| Common Stock | $300000 |
b.
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| b | Cash | $375000 | |
| Common Stock | $300000 | ||
| Paid - in Capital in Excess of Par | $75000 |