Chapter 13, Problem E13.20E

To determine

Concept Introduction:

Common stock and its issue:

Common stock can be defined as the share of issue to raise funds for the operations of the business. The common shares can be issued at a premium i.e. a price above par value. When the common stocks are issued at a price above par value, the over and above cash received from the par is added to “Additional paid in capital”.

Requirement 1

To record journal entry for –

a. Issue of stock if the stock is true no-par stock

b. Issue of stock if the stock has stated value of $ 2 per share

To determine

Requirement 2

Which type of stock results in more total paid-in capital