Question

Todd Corporation sold 4 million of its $1 par common shares at $6 per share. The company received net proceeds from the public offering of $23,600,000, after deducting legal, promotional, and accounting services necessary to effect the sale. Prepare the appropriate journal entry for the sale of the stock.

Answer 1

Explanation:

The journal entries are shown below:

1. Cash Dr $23,600,000

               To Common stock $4,000,000                 (4 million × $1)

               To Additional paid in capital in excess of par - common stock $19,600,000

(Being the issuance of the common stock is recorded)

2. Stock issue expenses Dr $4,000,000

               To Cash $4,000,000

(Being the stock issue expenses is recorded)