During its first year of operations, Bramble Corp. had these transactions pertaining to its common stock. Jan. 10 Issued 25,200 shares for cash at $4 per share. July 1 Issued 51,000 shares for cash at $7 per share. (a) Journalize the transactions, assuming that the common stock has a par value of $4 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share.

Answer and Explanation:

The journal entries are shown below:

a.

On Jan 10

Cash Dr $100,800 (25200 shares * $4)

To Common Stock $100,800

(Being the common stock is issued)

To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder so common stock is credited

On July 1

Cash $357,000 (51,000 shares * $7)

To Common stock $204,000 (51,000 shares * $4)

To Additional Paid in capital in excess of par value - Common stock $153,000 (51,000 shares * $3)

(Being the issuance of the common stock is recorded)

To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder and the common stock is credited with the additional capital paid for common stock

b.

On Jan 10

Cash $100,800 (25,200 shares * $4)

To Common stock $25,200 (25,200 shares * $1)

To Additional Paid in capital in - Common stock $75,600 (25,200 shares * $3)

(Being the issuance of the common stock is recorded)

To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder and the common stock is credited with the additional capital paid for common stock

On July 1

Cash $357,000 (51,000 shares * $7)

To Common stock $51,000 (51,000 shares * $1)

To Additional Paid in capital in - Common stock $306,000 (51,000 shares * $6)

(Being the issuance of the common stock is recorded)

To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder and the common stock is credited with the additional capital paid for common stock