Question

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.

1. the stock has a $6 par value.
2. the stock has neither par nor stated value.
3. the stock has a $3 stated value.

view transaction list
journal entry worksheet
record the issue of 8,000 shares of $6 par value common stock for $73,100 cash.
note: enter debits before credits.

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
	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
	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
	Common Stock		24000
	Paid - in Capital in Excess of Stated Value - Common Stock		49100

Answer:

1. Journal Entry (Par - value case):

Debit Cash: \(\$73100\); Credit Common Stock: \(\$48000\); Credit Paid - in Capital in Excess of Par - Common Stock: \(\$25100\)

1. Journal Entry (No - par/no - stated value case):

Debit Cash: \(\$73100\); Credit Common Stock: \(\$73100\)

1. Journal Entry (Stated - value case):

Debit Cash: \(\$73100\); Credit Common Stock: \(\$24000\); Credit Paid - in Capital in Excess of Stated Value - Common Stock: \(\$49100\)