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    smiley007's Avatar
    smiley007 Posts: 5, Reputation: 1
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    #1

    Jan 29, 2009, 06:49 AM
    Common stock
    Received 70,000 for the sale of 50,000 shares of $1 par value common stock. What is the journal entry:confused:
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Jan 29, 2009, 08:21 AM

    DR Bank account--------------70,000
    Cr Paid-Up Capital account------------50,000
    Cr Premium on shares acccount------20,000

    Being $ 70,000 for the sale of 50,000 shares of $1 par value.
    Cynthia514's Avatar
    Cynthia514 Posts: 37, Reputation: 1
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    #3

    Jan 29, 2009, 12:43 PM
    Nope, I think the J/E will be as followed:
    Dr: Cash... 70,000
    Cr: Common share... 70,000
    You only calculate the difference when you buy back the shares. Which means you have to calculate the average price of shares then decide the amount of common share you give up.
    In this case, whether the reacquisition price of shares is higher or lower the average price of shares, you need the contribution surplus account. But I'm still not very clear about Contribution surplus therefore I can't give you further information.
    smiley007's Avatar
    smiley007 Posts: 5, Reputation: 1
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    #4

    Jan 30, 2009, 11:13 AM
    Quote Originally Posted by Cynthia514 View Post
    Nope, I think the J/E will be as followed:
    Dr: Cash.....70,000
    Cr: Common share.....70,000
    You only calculate the difference when you buy back the shares. Which means you have to calculate the average price of shares then decide the amount of common share you give up.
    in this case, whether the reacquisition price of shares is higher or lower the average price of shares, you need the contribution surplus account. But I'm still not very clear about Contribution surplus therefore I can't give you further information.
    Thank You - Cynthia514 that journal entry causes the genenal journal to balance. I am very happy for your response to this question. :)
    codyman144's Avatar
    codyman144 Posts: 544, Reputation: 31
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    #5

    Jan 31, 2009, 12:04 AM
    Quote Originally Posted by Cynthia514 View Post
    Nope, I think the J/E will be as followed:
    Dr: Cash.....70,000
    Cr: Common share.....70,000
    You only calculate the difference when you buy back the shares. Which means you have to calculate the average price of shares then decide the amount of common share you give up.
    in this case, whether the reacquisition price of shares is higher or lower the average price of shares, you need the contribution surplus account. But I'm still not very clear about Contribution surplus therefore I can't give you further information.
    Good try but not quite true, as I have told you before Common Stock is at par value and the rest of the proceeds go to Additional Paid in Capital.
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