# McVie Corporation’s stock has a par value of $2. The company has the following transactions during the year: 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 7EA Textbook Problem 1 views ## McVie Corporation’s stock has a par value of$2. The company has the following transactions during the year:Journalize the transactions.

To determine

To journalize:

The transactions relating to issue of equity and preference shares.

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.

### Explanation of Solution

Record issuance of common stock:

 Date Account Title and Explanation Post Ref. Debit ($) Credit($) 28th, February Cash ($5×300,000) 1,500,000 Additional paid-in capital from common stock ($3×300,000) 900,000 Common Stock ($2×300,000) 600,000 (To record issuance of$2 par value common stock for cash.)

Table (1)

• Cash is an asset and it is increased by $1,500,000. Therefore, cash account is debited with$1,500,000.
• Additional paid-in capital from common stock is capital and it is increased by $900,000. Therefore, Additional paid-in capital from common stock is credited with$900,000.
• Common Stock is capital and it is increased by $600,000. Therefore, Common Stock is credited with$600,000.

Record issuance of common stock:

 Date Account Title and Explanation Post Ref

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