Question

Springer Co. was incorporated on January 1, 2019, at which time 500,000 shares of $1 par value common stock were authorized, and 210,000 of these shares were issued for $9 per share. Net income for the year ended December 31, 2019, was $1,900,000. Springer Co.’s board of directors declared dividends of $1.40 per share of common stock on December 31, 2019, payable on January 27, 2020.

The entry to record the issuance of common stock on January 1, 2019 is:

Springer Co. was incorporated on January 1, 2019, at which time 500,000 shares of $1 par value common stock were authorized, and 210,000 of these shares were issued for $9 per share. Net income for the year ended December 31, 2019, was $1,900,000. Springer Co.'s board of directors declared dividends of $1.40 per share of common stock on December 31, 2019, payable on January 27, 2020. The entry to record the issuance of common stock on January 1, 2019 is: Multiple Choice Cash 1,890, e00 Dr. 1,890, e00 Cr. Common Stock Cash 1,890, e00 Dr. Cr. Common Stock 210, e00 Additional Paid-In Capital 1,680, e00 Cr. Cash |1,900,e00 Dr. 1,900, e00 Cr. Net Income Cash Dr. 4,500, e00 Common Stock Cr. 500, 000 Additional Paid-In Capital Cr. 4, e00, 000

Answer 1

Correct answer-------------

Cash	$ 1,890,000
Common stock		$ 210,000
Additional paid in capital		$ 1,680,000

Working

Common stock will be credited by Par value per common stock times the shares issued. (210000 x $1)

Additional paid in capital in this case is $8 which is price of shares minus par value. Total additional paid in capital received is 1680000. (210000 x $8)