Finlay, Inc., issued 10,000 shares of $51 par value preferred stock at $69 per share and 14,000 shares of no-par value common stock at $10 per share. The common stock has no stated value. All issuances were for cash. a. Prepare the journal entries to record the share issuances. b. Prepare the journal entry for the issuance of the common stock assuming that it had a stated value of $5 per share. c. Prepare the journal entry for the issuance of the common stock assuming that it had a par value of $1 per share.

Answer and Explanation:

The journal entries are shown below;

a. Cash  (10000 × $69) $690,000  

         To Preferred stock (10000 × $51) $510,000

         To Additional paid in capital $180,000

(Being issuance of the preferred stock is recorded)

Cash (14000 × $10) $140,000  

         To Common stock no par value  $140,000

(being issuance of the common stock is recorded)

b.  

Cash $140,000  

       To Common stock stated value (14000  ×$5) $70,000

       To Paid in capital in excess of stated value $70,000

(being issuance of the common stock is recorded)

c.  

Cash $140,000  

       To Common stock at par (14000 × $1)  $14,000

        To Paid in capital in excess of par $126000

(being issuance of the common stock is recorded)

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