Ncentive Corporation was authorized to issue 12,000 shares of common stock, each with a $2 par value. During its first year, the following selected transactions were completed:

a. Issued 5,100 shares of common stock for cash at $21 per share.

b. Issued 1,100 shares of common stock for cash at $24 per share.

Prepare the journal entry required for each of these transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer and Explanation:

The journal entries are as follows

a. Cash A/c Dr $107,100 (5,100 shares * $21)

To Common Stock $10,200 (5,100 shares * $2)

To Additional Paid-in Capital in excess of par - Common Stock $96,900

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

b. Cash A/c Dr $26,400 (1,100 shares * $24)

To Common Stock $2,200 (1,100 shares * $2)

To Additional Paid-in Capital in excess of par - Common Stock $24,200

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

It increased the both cash and common stock stock and the additional paid in capital account as well