Question

Recording the Sale of Common Stock
Yellow Company, a food coloring manufacturer that provides its products to large processed-food corporations, issues 48,000 shares of common stock (par value $20) for $30 per share.
Required:
Prepare the necessary journal entry to record this transaction. If an amount box does not require an entry, leave it blank.
Cash ______ 0
Common Stock 0 _______
Additional Paid-In Capital-Common Stock 0 _______

Answer 1

This transaction's journal entry will be as follows:

Cash A/c....Dr. $14,40,000

Common Stock A/c....Cr. $9,60,000

Paid in capital in excess of par-common stock $4,80,000

In a company's accounting books, a journal entry serves as a record of its financial transactions. A properly recorded journal entry includes an exact date, the debit and credit amounts, the transaction's description, and a unique reference number.

Journal entries are as follows:

Cash A/c....Dr. $14,40,000 (48000*30)

Common Stock A/c....Cr. $9,60,000 (48000*20)

Paid in capital in excess of par-common stock $4,80,000

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