Final answer:
The issuance of 2,000 shares of common stock with a par value of $10 at $18 per share would be recorded by debiting Cash for $36,000, crediting Common Stock for $20,000, and crediting Additional Paid-in Capital for $16,000.
Step-by-step explanation:
The student asked how to journalize the issuance of common stock when 2,000 shares of $10 par value common stock are issued for cash at $18 per share. In accounting, this transaction would increase cash and common stock equity on the company's balance sheet. The entry would be a debit to Cash for the total amount received ($36,000) and a credit to Common Stock for the par value ($20,000) along with a credit to Additional Paid-in Capital for the amount above par value ($16,000).
The journal entry is as follows:
- Debit Cash $36,000 (2,000 shares x $18 per share)
- Credit Common Stock $20,000 (2,000 shares x $10 par value)
- Credit Additional Paid-in Capital $16,000 (the excess of cash received over par value)