# James Incorporated is authorized to issue 5,000,000 shares of $1 par value common stock. In its second year of business, the company has the following transactions: Journalize the transactions. FindFindarrow_forward ### Principles of Accounting Volume 1 19th Edition OpenStax Publisher: OpenStax College ISBN: 9781947172685 #### Solutions Chapter Section FindFindarrow_forward ### Principles of Accounting Volume 1 19th Edition OpenStax Publisher: OpenStax College ISBN: 9781947172685 Chapter 14, Problem 6EA Textbook Problem 1 views ## James Incorporated is authorized to issue 5,000,000 shares of$1 par value common stock. In its second year of business, the company has the following transactions:Journalize the transactions.

To determine

Introduction:

Common stock is owners’ capital contributed in the business. Holders of the common stock reserve right to participate in voting. Profits are distributed to common stock holders and they receive assets in the event of dissolution of the company.

To journalize:

The transactions relating to issue of common stock.

### Explanation of Solution

Record issuance of shares:

 Date Account Debit ($) Credit ($) March, 31 Cash (30,000 shares×$10) 300,000 Common Stock (30,000 shares×$1) 30,000 ....... Additional Paid-in Capital from Common Stock (30,000 shares×$9) 270,000 (To record issue of shares for cash) Table(1) • Cash is an asset and it is increased by$300,000. Therefore, cash account is debited with $300,000. • Common stock is a capitalaccount and it is increased by$30,000. Therefore, common stock account is credited with $30,000. • Additional Paid-in Capital from Common Stock is a capital account and it is increased by$270,000. Therefore, additional paid-in capital from common Stock is credited with $270,000. Record issuance of common stock:  Date Account Debit ($) Credit ($) July, 9 Building 700,000 Common Stock (100,000×$1) 100,000 Additional Paid-in Capital from Common Stock ($700,000−$100,000) 600,000 (To record issue of common stock in exchange of building

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