Q2TI - Horngren'S Financial And Managerial Accounting

Question

London Corporation has two classes of stock: Common, \(1 par value; and Preferred, \)4 par value. Journalize the issuance of 10,000 shares of common stock for $8 per share.

Step-by-Step Solution

Answer

Cash debited by $80,000 and Common stock credited by $80,000.

Step 1: Basic Introduction-

Common stock represents ownership in a corporate organisation. Common stockholders elect the board of directors and vote on policies related to corporation. 

Step 2: Journals-

Date	Transaction	Debit	Credit
	Cash (10,000 * $8)	$80,000
	Common stock		$80,000
	To record issuance of common stock