Question

Prepare the issuer’s journal entry for each of the following separate transactions.

a. On March 1, Atlantic Co. issues 42,500 shares of \(4 par value common stock for \)297,500 cash.

b. On April 1, OP Co. issues no-par value common stock for \(70,000 cash.

c. On April 6, MPG issues 2,000 shares of \)25 par value common stock for \(45,000 of inventory, \)145,000 of machinery, and acceptance of a $94,000 note payable.

Short answer

a. Cash is debited by $297,500and Common stock and Paid-in capital are credited by $170,000 and $127,000, respectively.

b. Cash is debited by $70,000 and Common stock is credited by $70,000.

c. Inventory and Machinery are debited by $145,000 and $45,000, respectively and Notes payable, Common stock and Paid-up capital are credited by $94,000, $50,000 and $46,000, respectively.

Step-by-step solution

(a) Journal Entries

Date	Account and explanation	Debit	Credit
March 01	Cash	$297,500
	Common Stock (42,500 x $4)		$170,000
	Paid-In Capital in Excess of Par Value, Common Stock		$127,500
	(Issued 42,500 shares of $ 4 par value common stock at $ 297,500.)

(b)Journal Entries

Date	Account and explanation	Debit	Credit
April 01	Cash	$70,000
	Common Stock, No- Par Value		$70,000
	(Issued no par value shares for $ 70,000)

(c) Journal Entries 

Date	Account and explanation	Debit	Credit
April 06	Inventory	$45,000
	Machinery	$145,000
	Notes Payable		$94,000
	Common Stock (2,000 x $25)		$50,000
	Paid-In Capital in Excess of Par Value, Common Stock		$46,000
	(Issued 2,000 shares of $ 25 par value common stock and notes payable at $ 190,000.)