Some states require corporations to issue par value stock, while others do not have this requirement....
Some states require corporations to issue par value stock, while others do not have this requirement. If there is no par value assigned to stock, it is known as stated value stock that is assigned a "stated value" per share.
In this case, if a person invests $100,000 cash into a newly created corporation in exchange for 1,000 shares of $100 stated value common stock, the corporation records this transaction in their general ledger accounts as follows - Debit Cash $100,000, Credit Common Stock $100,000.
A. True
B. False
Homework Answers
The given journal entry is True.
Explanations :
Whenever there is no par value of the stock decided, then the stock issued is known as stated value of common stock. Hence, all the amount received in exchange of common stock is recorded and credited to common stock account. Hence, Journal entry for cash received in exchange of issuance of stated value of common stock will be Debit Cash $100,000, Credit Common Stock $100,000.
Hence the given journal is correct.
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Some states require corporations to issue par value stock, while
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to the common stock. At December 31, 2020, the ledger contained the
following balances pertaining to stockholders’ equity.
Preferred Stock
$130,000
Paid-in Capital in Excess of Par—Preferred Stock
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Paid-in Capital in Excess of Stated Value—Common Stock
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