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Prepare the issuer's journal entry for each of the following separate transactions.On March 1, Atlantic Company issues 44,000 shares of $5 par value common stock for $302,000 cash.On April 1, OP Company issues no-par value common stock for $73,000 cash.On April 6, MPG issues 2,300 shares of $15 par value common stock for $42,000 of inventory, $150,000 of machinery, and acceptance of a $92,000 note payable.

Question

Prepare the issuer's journal entry for each of the following separate transactions.On March 1, Atlantic Company issues 44,000 shares of 5parvaluecommonstockfor5 par value common stock for 302,000 cash.On April 1, OP Company issues no-par value common stock for 73,000cash.OnApril6,MPGissues2,300sharesof73,000 cash.On April 6, MPG issues 2,300 shares of 15 par value common stock for 42,000ofinventory,42,000 of inventory, 150,000 of machinery, and acceptance of a $92,000 note payable.

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Solution

Here are the journal entries for each of the transactions:

  1. For Atlantic Company on March 1:

    Debit: Cash 302,000Credit:CommonStock302,000 Credit: Common Stock 220,000 (44,000 shares * 5parvalue)Credit:Paid−inCapitalinExcessofParValue5 par value) Credit: Paid-in Capital in Excess of Par Value 82,000 (302,000cash−302,000 cash - 220,000 common stock)

  2. For OP Company on April 1:

    Debit: Cash 73,000Credit:CommonStock73,000 Credit: Common Stock 73,000 (Since it's no-par value common stock, the entire amount goes to common stock)

  3. For MPG on April 6:

    Debit: Inventory 42,000Debit:Machinery42,000 Debit: Machinery 150,000 Debit: Notes Payable 92,000Credit:CommonStock92,000 Credit: Common Stock 34,500 (2,300 shares * 15parvalue)Credit:Paid−inCapitalinExcessofParValue15 par value) Credit: Paid-in Capital in Excess of Par Value 249,500 (284,000total−284,000 total - 34,500 common stock)

Please note that the "Paid-in Capital in Excess of Par Value" account is used to record the amount received over the par value of the shares.

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