Answer:
Gothic Architecture
General Journal:
Debit Cash Account $22,000
Credit Common Stock $1,000
Credit Additional Paid-in Capital $21,000
To record the issuance of 1,000 shares, $1 par value at $22 each.
If Gothic issued no-par value stock, the entries would change to
Debit Cash Account $22,000
Credit Common Stock $22,000
To record the issuance of 1,000 shares at $22 each.
Explanation:
The par value is the nominal value at which shares are issued. Shares can be issued at the par value, above par value (premium), and below par value (discount).
The difference between par value and above or below par value is recorded in another account called the Additional Paid-in Capital account. This helps maintain the Issued Stock account at its par value.
