To expand operations, Aragon Consulting issued 1,300 shares of previously unissu
ID: 2614838 • Letter: T
Question
To expand operations, Aragon Consulting issued 1,300 shares of previously unissued common stock with a par value of $1. The price for the stock was $50 per share.
1-a. Complete the table below, indicating the account, amount, and direction of the effect for the stock issuance. (Enter any decreases to account balances with a minus sign.)
1-b. Prepare the journal entry for the stock issuance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
2-a. Complete the table below, indicating the account, amount, and direction of the effect for the stock issuance with a par value of $2. (Enter any decreases to account balances with a minus sign.)
2-b. Prepare the journal entry for the stock issuance, if the par value were $2 per share. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Explanation / Answer
1a: The accounts affected are : Cash – Increase of $65000 (1300*50)
Share capital- Increase of $1300 (1300*1)
Additional paid in capital – Increase of (1300*49)= $63700
B: Journal entry
Cash- Dr 65000
Share capital – Cr 1300
Additional Paid in capital-Cr 63700
2a: The accounts affected are : Cash – Increase of $65000 (1300*50)
Share capital- Increase of $2600 (1300*2)
Additional paid in capital – Increase of (1300*48)= $62400
B: Journal entry
Cash- Dr 65000
Share capital – Cr 2600
Additional Paid in capital-Cr 62400