Question

Prepare the journal entry to record Jevonte Company’s issuance of 36,000 shares of its common stock assuming the shares have a:

a. \(2 par value and sell for \)18 cash per share.

b. \(2 stated value and sell for \)18 cash per share

Short answer

1. Cash is debited by $648,000 and; Common stock and Paid-in capital in excess of par value- common stock, are credited by $72,000 and $576,000.
2. Cash is debited by $648,000 and; Common stock and Paid-in capital in excess of stated value-common stock are credited by $72,000 and $576,000.

Step-by-step solution

Explanation on common stock

Common stocks are those stocks which are issued by the company to the people having voting rights. They are entitled to dividend and repayment of capital after payment is made to preference shareholders

(a) Journal entry for issuance

Date	Account and explanation	Debit	Credit
	Cash (36,000 x $18)	$648,000
	Common Stock, $2 Par Value (36,000 x $2)		$72,000
	Paid-In Capital in Excess of Par Value, Common Stock (36,000 x $16)		$576,000
	(Issued 36,000 shares of $2 par value common stock at $ 18 per share.)

(b) Journal entry for issuance

Date	Account and explanation	Debit	Credit
	Cash (36,000 x $18)	$648,000
	Common Stock, $2 Stated Value (36,000 x $2)		$72,000
	Paid-In Capital in Excess of Stated Value, Common Stock (36,000 x $16)		$576,000
	(Issued 36,000 shares of $2 Per share stated value common stock at $ 18 per share.)