rodriguez corporation issues 8,000 shares of its common stock for $73,100 cash on february 20. prepare…
rodriguez corporation issues 8,000 shares of its common stock for $73,100 cash on february 20. prepare journal entries to record this event under each of the following separate situations.\n1. the stock has a $6 par value.\n2. the stock has neither par nor stated value.\n3. the stock has a $3 stated value.\nview transaction list\njournal entry worksheet\nrecord the issue of 8,000 shares of $6 par value common stock for $73,100 cash.\nnote: enter debits before credits.\n
Answer
Explanation:
Situation 1: Stock has a $6 par value
Step1: Calculate the par - value amount
The par - value of the stock is calculated by multiplying the number of shares by the par value per share. The number of shares (n = 8000) and par value per share (p=$6). So, the par - value amount (=n\times p=8000\times6=$48000)
Step2: Calculate the paid - in capital in excess of par
The cash received is (C = $73100). Paid - in capital in excess of par (=C-(n\times p)=73100 - 48000=$25100) The journal entry is:
| Date | Account Titles and Explanation | Debit | Credit |
|---|---|---|---|
| Feb 20 | Cash | 73100 | |
| Common Stock | 48000 | ||
| Paid - in Capital in Excess of Par - Common Stock | 25100 |
Situation 2: Stock has neither par nor stated value
When there is no par or stated value, the entire amount of cash received is credited to the Common Stock account. The journal entry is:
| Date | Account Titles and Explanation | Debit | Credit |
|---|---|---|---|
| Feb 20 | Cash | 73100 | |
| Common Stock | 73100 |
Situation 3: Stock has a $3 stated value
Step1: Calculate the stated - value amount
The stated - value of the stock is calculated by multiplying the number of shares by the stated value per share. The number of shares (n = 8000) and stated value per share (s=$3). So, the stated - value amount (=n\times s=8000\times3=$24000)
Step2: Calculate the paid - in capital in excess of stated value
The cash received is (C=$73100). Paid - in capital in excess of stated value (=C-(n\times s)=73100 - 24000=$49100) The journal entry is:
| Date | Account Titles and Explanation | Debit | Credit |
|---|---|---|---|
| Feb 20 | Cash | 73100 | |
| Common Stock | 24000 | ||
| Paid - in Capital in Excess of Stated Value - Common Stock | 49100 |
Answer:
- Journal Entry (Par - value case): Debit Cash: ($73100); Credit Common Stock: ($48000); Credit Paid - in Capital in Excess of Par - Common Stock: ($25100)
- Journal Entry (No - par/no - stated value case): Debit Cash: ($73100); Credit Common Stock: ($73100)
- Journal Entry (Stated - value case): Debit Cash: ($73100); Credit Common Stock: ($24000); Credit Paid - in Capital in Excess of Stated Value - Common Stock: ($49100)