Loose Leaf for Fundamental Accounting Principles
Loose Leaf for Fundamental Accounting Principles
23rd Edition
ISBN: 9781259687709
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 13, Problem 3QS
To determine

Concept Introduction:

Types of Stocks:

These are two types of the share capital of a company. Common Stock represents the Common shares issued to the shareholders and preferred stock represents the preference shares issued. Preference shares are given preference in payment of dividends and repayment of capital. Common shareholders get the inbuilt right to vote in decisions of the company and a preference shareholders generally do not get this right but they may get voting rights with special provisions.

Issuance of Common Stock: Common Stock may be issued at par or stated value. In case the issue price is more than the par or stated value, the shares are called to be issued at premium and in case the issue price is less than the par or stated value, the shares are called to be issued at discount. Common stocks may also be issued at no par or stated value, in such case there shall be no premium or discount recorded on the issue of shares.

Requirement-a:

To Prepare: The Journal entry to record the issuance of 36,000 shares of $2 par value common stock at $18 cash per share.

To determine

Requirement-b:

To Prepare: The Journal entry to record the issuance of 36,000 shares of $2 stated value common stock at $18 cash per share.

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Loose Leaf for Fundamental Accounting Principles

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