1. Two thousand shares of no-par common stock are issued to the corporation’s promoters in exchange for their efforts, estimated to be worth $30,000. The stock has no stated value.
2. Two thousand shares of no-par common stock are issued to the corporation’s promoters in exchange for their efforts, estimated to be worth $30,000. The stock has a $1 per share stated value.


These are two homework questions that I have. My question here is what do I debit? Usually you issue stock in exchange for cash or some sort of inventory. Here, it just says in exchange for their efforts. What is the heading for the debit?

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Originally Posted by slh6582

1. Two thousand shares of no-par common stock are issued to the corporation’s promoters in exchange for their efforts, estimated to be worth $30,000. The stock has no stated value.
2. Two thousand shares of no-par common stock are issued to the corporation’s promoters in exchange for their efforts, estimated to be worth $30,000. The stock has a $1 per share stated value.


These are two homework questions that I have. My question here is what do I debit? Usually you issue stock in exchange for cash or some sort of inventory. Here, it just says in exchange for their efforts. What is the heading for the debit?

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You can issue stock for all sorts of expenses, for instance research and development, selling, consulting, even accounting.
Then your entry is
Dr> appropriate P&L account
Cr> Common Stock for par value
Cr> APIC

So in the example I gave, I can just make up an expense? Since the example just says "in exchange for their efforts" and no specific expense is listed, then I just make one up? Or should I put it under promotional expense?

Quote:

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Originally Posted by slh6582

So in the example I gave, I can just make up an expense? Since the example just says "in exchange for their efforts" and no specific expense is listed, then I just make one up? Or should I put it under promotional expense?

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That's what I would do. If the homework assignment did not provide a chart of accounts or any other information I would put it to "General administrative expense" or something like that. Promotion expense usually is used for promotion of a product or service