Question

Hamilton International issues 5,000 shares of its $1 par value common stock to provide funds for further expansion. If the issue price is $15 per share, what is the journal entry to record the share issue

Answer 1

Answer and Explanation:

The journal entry for issuance of the shares is as follows:

Cash Dr (5,000 × $15) $75,000

To Common stock(5,000 × $1) $5,000

To Additional paid in capital $70,000

(being the issuance of the shares is recorded)

Here the cash is debited as it increased the assets and credited the common stock and additional paid in capital as it increased the equity