During its first year of operations, Whispering Winds Corp. had these transactions pertaining to its common stock. Jan. 10 Issued 26,600 shares for cash at $6 per share. July 1 Issued 58,000 shares for cash at $7 per share. (a) Journalize the transactions, assuming that the common stock has a par value of $6 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share.

(a)

Jan 10

Debit: Cash $159,600

Credit: Common Stock $159,600

July 1

Debit: Cash $406,000

Credit: Common Stock $348,000

Credit: Paid in Capital $58,000

(b)

Jan 10

Debit: Cash $159,600

Credit: Common Stock $26,600

Credit: Additional Paid in Capital $133,000

July 1

Debit: Cash $406,000

Credit: Common Stock $58,000

Credit: Additional Paid in Capital $348,000

Explanation:

(a)

Jan 10

Debit: Cash (26,600 shares x $6 per share) $159,600

Credit: Common Stock (26,600 shares x $6 per share) $159,600

To Record Issuance of 26,600 shares at $6 per share par value.

July 1

Debit: Cash (58,000 shares x $7 per share) $406,000

Credit: Common Stock (58,000 shares x $6 per share) $348,000

Credit: Paid in Capital (58,000 shares x $1 per share) $58,000

To Record Issuance of 58,000 shares at $7 per share and excess paid in Capital in terms of Par Value.

(b)

Jan 10

Debit: Cash (26,600 shares x $6 per share) $159,600

Credit: Common Stock (26,600 shares x $1 per share) $26,600

Credit: Additional Paid in Capital (26,600 shares x $5 per share) $133,000

To Record Issuance of 26,600 shares of no-par common stock with $1 stated value for $6 per share.

Note: In the above scenario, the legal capital of company would be $26,600, because no-par common stock has a stated value.

July 1

Debit: Cash (58,000 shares x $7 per share) $406,000

Credit: Common Stock (58,000 shares x $1 per share) $58,000

Credit: Additional Paid in Capital (58,000 shares x $6 per share) $348,000

To Record Issuance of 58,000 shares of no-par common stock with $1 stated value for $7 per share.

Note: In the above scenario, the legal capital of company would be $58,000, because no-par common stock has a stated value.

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