Answer:
The record of the issuance of the stock is debit to cash for $50,000, credit to common stock for $10,000 and credit to excess of common stock of $40,000.
Explanation:
A. Entries of the stock
1. Account(cash)
Cash=10,000 shares at $5 per share
Cash=10,000×5=$50,000
Cash to Debit=$50,000
Credit this account=$0
2. Account (common stock)
Common stock=10,000 shares at $1 per value common stock
Common stock=10,000×1=$10,000
Credit account=$10,000
Debit this account=$0
3. Account (Paid-in Capital in Excess of Par - Common Stock)
Paid in capital in excess of par-common stock=50,000-10,000=$40,000
Credit this account=$40,000
Debit this account=$0
This can be written as;
Account Debit ($) Credit ($)
Cash (10,000 shares×$5 price) 50,000
Common Stock (10,000 shares×$1 par) 10,000
Paid-in Capital in Excess of Par - Common Stock 40,000
The record of the issuance of the stock is debit to cash for $50,000, credit to common stock for $10,000 and credit to excess of common stock of $40,000.
