Rodriguez Corporation issues 12,000 shares of its common stock for $210,500 cash on February 20. Prepare journal entries to record this event under each of the following separate situations.
a. The stock has a $14 par value.
b. The stock has neither par nor stated value.
c. The stock has a $7 stated value.

Answer and Explanation:

The journal entries are as follows

a. Cash$210,500

       To Common Stock (12,000 × $14)$168,000

       To Paid in capital in excess of par value-Common Stock$42,500

(being the issue of the common Stock is recorded)

For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity

b. Cash$210,500

            To Common Stock$210,500

(being the issue of the common Stock is recorded)

For recording this we debited the cash as it increased the assets and credited the common stock as it also increased the stockholder equity

c. Cash$210,500

        To Common Stock  (12,000 × $7)$84,000

         To Paid in capital in excess of stated value-Common Stock$126,500

(being the issue of the common Stock is recorded)

For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity

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