Question

Osage Corporation issued 2,000 shares of stock. Instructions Prepare the entry for the issuance under the following assumptions. (a) The stock had a par value of $5 per share and was issued for a total of $52,000. (b) The stock had a stated value of $5 per share and was issued for a total of $52,000. (c) The stock had no par or stated value and was issued for a total of $52,000. (d) The stock had a par value of $5 per share and was issued to attorneys for services during incorporation valued at $52,000. (e) The stock had a par value of $5 per share and was issued for land worth $52,000.

Answer 1

Answer:

The journal entries will as under the explanation below.

Explanation:

(a) The stock had a par value of $5 per share and was issued for a total of $52,000.

Account Name                                          Dr ($)                 Cr ($)  

Cash                                                        52,000

Common stock (2,000 * 5)                                              10,000

Paid in capital in excess of per value                             42,000

(To record common stock issued in excess of par value.)            

(b) The stock had a stated value of $5 per share and was issued for a total of $52,000.

Account Name                                             Dr ($)              Cr ($)  

Cash                                                            52,000

Common stock (2,000 * 5)                                                10,000

Paid in capital in excess of stated value                          42,000

(To record common stock issued in excess of stated value.)            

Note: The stated value is used for internal accounting purpose when there is no par value for the stock.

(c) The stock had no par or stated value and was issued for a total of $52,000.

Account Name                                    Dr ($)              Cr ($)            

Cash                                                   52,000

Common stock                                                         52,000

(To record common stock issued that had no par or stated value.)  

Note: When stock had no par or stated value, the total proceeds from the issue becomes the legal capital.

(d) The stock had a par value of $5 per share and was issued to attorneys for services during incorporation valued at $52,000.

Account Name                                       Dr ($)                 Cr ($)                

Attorney service expenses                   52,000

Common stock (2,000 * 5)                                              10,000

Paid in capital in excess of per value                            42,000

(To record common stock issued to attorneys for services at a premium.)

(e) The stock had a par value of $5 per share and was issued for land worth $52,000.

Account Name                                        Dr ($)                 Cr ($)      

Land (Fair value)                                     52,000

Common stock (2,000 * 5)                                              10,000

Paid in capital in excess of per value                            42,000

(To record common stock issued for land at a premium.)