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Issuance of stock:
Transaction Description Journal Entry Account Title Debit Credit
Issuance of Common Stock at par value Issuance of Common Stock above par value Issuance of Common Stock at stated value
Issuance of Common Stock above stated value
Cash Common Stock Cash Common Stock PIC in Excess of Par Value-Common Cash Common Stock
Cash Common Stock PIC in Excess of Stated Value-Common
Record common stock always at its par or stated value. Multiply the number of shares sold times the par or stated value to get the dollar amount credited to common stock. Subtract the par or stated value from the market price to calculate the paid-in-capital in excess of par value for the common stock per share. Next, multiply the resulting amount time the number of shares sold to calculate the dollar amount for the paid-in-capital in excess of par value-common.
Issuance of Preferred Stock at par value Issuance of Preferred Stock above par value
Calculated the dollar amounts for preferred stock in the same manner as for common stock.
Treasury Stock:
Transaction Description Journal Entry Account Title Debit Credit
Purchase of treasury Treasury Stock XXX stock Cash XXX Multiply the per share market cost times the number of shares purchased to get the amount.
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XXX XXX
Dividends Payable XXX Cash XXX Calculate the dollar amount for common stock dividends by multiplying the amount per share times the number of shares outstanding. Shares outstanding are calculated by subtracting the number of treasury stock shares from the number of shares sold to the public.
Stock Dividends:
Transaction Description Journal Entry Account Title Debit Credit
Declaration Date
Retained Earnings (Stock Dividends) Common Stock Dividends Distributable PIC in Excess of Par Value-Common No Journal Entry
Common Stock Dividends Distributable Common Stock Calculate by multiplying the number of shares times the par value.
XXX XXX
Closing a net income into Retained Earnings Closing a net loss into Retained Earnings
Closing Cash Dividends Retained Earnings XXX into Retained Earnings Cash Dividends XXX Temporary accounts such as revenues and expenses plus cash dividends must be closed at the end of each fiscal period.
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