Study with Quizlet and memorize flashcards containing terms like Issuance of Common Stock: Yael Corporation issues 200,000 common shares of $3 par value stock for $5 per share. The par value is selected by the corporation. As stated in the prospectus, the first call of 20 per cent is due from the Class A shareholders by September 30. Memo: To record stock option compensation. Par value is not even a reliable indicator of the price at which shares can be issued. For example, we issue 5,000 shares of common stock in our corporation to acquire a plot of land. Company name must be at least two characters long. In this case, the debit side of the journal entry will be the expense amounting to the cost or the fair value of the service that needs to be charged to the income statement instead. Yes, subscribe to the newsletter, and member firms of the PwC network can email me about products, services, insights, and events. Journal Entry For Issue of Common Stock - Your Comprehensive Guide The calculation for the first call on class A shares is: 10 applications x(10,000 shares x $20 issue price x 20 per cent due on first call) = $400,000. Our first debit entry is to theClass A Share Capital for $100,000, being 100,000 at $1 par value. d.$2,000; Prepare journal entries to record the issuance of 100,000 shares of common stock at $20 per share for each of the following independent cases: a. And then the $1,400,000, which records the addition paid-in capital, or the share premium Kevin paid. When a company issues common shares, it is selling ownership in the company to investors in exchange for cash. So, the fair value of the shares of the common stock given up will be used as the measurement if its market value is available. In the most simple form, you will see a deposit into the firms bank account and then issuance of common stock, i.e. As before, the following entry would be prepared by ABC Ltd each time a shareholder paid during the month; but the aggregate would look like the following: The debit to the bank account reflects the $400,000 ABC now has from its first call on the class A shares. How the proceeds are allocated depends on the accounting classification (i.e., liability or equity) of the other instruments. But no one shareholder allowed an allocation of more than one bundle. In a corporation, the common stock is usually issued for a higher value than its par value. How to Calculate Cost of Preferred Stock? Provide journal entries for 4 separate issuances of stock: 1. A
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