Copyright

COT Industries issued 27 million of its $1 par common shares for $488 million on April 11. Legal,...

Question:

COT Industries issued 27 million of its $1 par common shares for $488 million on April 11. Legal, promotional, and accounting services necessary to effect the sale cost $2 million.

Required:

Prepare the journal entry to record the issuance of the shares.

Share Issue:

The share issue increases the cash balance of the company if shares are issued for cash. The amount received on share issue in-excess of par value is recorded separately from the common stock. The issue expense is recorded as a miscellaneous expense.

Answer and Explanation:

Record journal entry as follows: -

Journal Entry
Date Particulars Debit Credit
11/Apr Cash $488
Miscelleneous Expense $2
Common Stock $27
Additional paid-in capital $461
Cash (bank) $2
(Being share issue recorded)


Learn more about this topic:

Loading...
Comparing Common & Preferred Stock

from Accounting 101: Financial Accounting

Chapter 11 / Lesson 5
3.9K

Related to this Question

Explore our homework questions and answers library