Question

Question: Identifying sources of equity, stock issuance, and dividends

Tillman Comfort Specialists, Inc. reported the following stockholders’ equity on its balance sheet at June 30, 2018:

Preferred Stock—5%, ? Par Value; 625,000 shares

authorized, 325,000 shares issued and outstanding

Paid-In Capital:

\( 1,300,000

1,350,000

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 2,600,000

Total Paid-In Capital 5,250,000

Retained Earnings 11,800,000

Total Stockholders’ Equity \) 17,050,000

Common Stock—$1 Par Value; 7,000,000 shares

authorized, 1,350,000 shares issued and outstanding

Requirements

3. Make two summary journal entries to record issuance of all the Tillman Comfort Specialists stock for cash. Explanations are not required.

Short answer

Answer

Cash will be debited, and preferred stock will be credited by $1,300,000.

Cash will be debited, and common stock will be credited by $1,350,000

Step-by-step solution

Basic Introduction

The issue of shares is the process in which corporations allocate new shares to the stockholders (individuals or corporations) through initial and further offer in recognize stock exchange.

Journal entry to issuance of stock

Date	Transaction	Debit	Credit
	Cash	$1,300,000
	Preferred Stock		$1,300,000
	Cash ($1 * 1,350,000)	$1,350,000
	Common Stock		$1,350,000