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27 July, 10:05

The Shoe Exchange issues 3,000 shares of its $1 par value common stock to provide funds for further expansion. The issue price is $19 per share. What is the entry to record the issuance of the stock?

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  1. 27 July, 12:14
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    Debit Cash account $57,000

    Credit Shares capital $3,000

    Credit Share premium $54,000

    Being entries to record cash received from the issuance of shares

    Explanation:

    Par value per share = $1

    Issue price per share = $19

    Premium per share from issue = $19 - $1

    = $18

    Number of issued shares = 3000

    Share capital balance from issue = 3000 * $1

    = $3000

    Premium balance = 3000 * $18

    = $54,000

    Cash received from Issue = 3000 * $19

    = $57,000

    Entries to be posted

    Debit Cash account $57,000

    Credit Shares capital $3,000

    Credit Share premium $54,000

    Being entries to record cash received from the issuance of shares.
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