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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Brown Corporation issues 800 shares of its $5 par common stock for $20 per share. Prepare the journal entry to record this transaction.

To determine

Prepare the journal entry to record the issuance of common stock.

Explanation

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.

Prepare the journal entry to record the issuance of common stock:

Account title and ExplanationPost Ref.

Debit

($)

Credit

($)

Cash ($20×800shares) $16,000 
    Common stock ($5

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