# Issuance of common stock

Section 6. Equity

Q31. Issuance of common stock
Entity A issued 30,000 shares of common stock at $17 per share. The par value of common stock is$1 per share.
Prepare a journal entry to record this transaction.

 Debit Credit Cash 510,000 Common stock, par value 30,000 Additional paid-in capital 480,000

[Note]
1. Increase in common stock (equity): credit
2. Increase in additional paid-in capital (equity): credit
3. The amount paid over the par value of common stock is recorded in the additional paid-in capital account.
(a) Issue price = $17 per share (b) Par value =$1 per share
(c) Additional paid-in capital = Issue price – Par value
= $17 –$1 = $16 per share (d) 30,000 shares x$16 = $480,000 [Exercise] Entity B issued 60,000 shares of common stock at$10 per share. The par value of common stock is $1 per share.  Debit Credit Cash 600,000 Common stock, par value 60,000 Additional paid-in capital 540,000 [Note] 1. Issue price =$10 per share
2. Par value = $1 per share 3. Additional paid-in capital =$9 per share
4. 60,000 shares x $9 =$540,000