Wize University Introduction to Financial Accounting Textbook > Shareholders' Equity
Issuing No-Par Value Shares
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Issuing Shares
Companies issue shares to raise capital from investors either in the form of cash or other assets. Shares can also be used to settle liabilities with creditors or pay for services when cash is not available.
Issuing Common Shares
- Debit what is received in exchange for shares
- Credit Common Shares
Issuing Preferred Shares
- Debit what is received in exchange for shares
- Credit Preferred Shares
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Example: Issuing Shares
Prepare the journal entries to record the following transactions:
Jan 12: Purchased equipment for $100,000 paying half in cash and issuing common shares for the balance.
Feb 17: Issued 4,000 preferred shares for $13 each.
Apr 12: Repaid a long-term debt obligation totalling $132,000 using common shares.
Practice: Issuing Shares
Prepare in proper form the journal entries to record the following transactions.
Received marketing services valued at $20,000 in exchange for common shares.
Transactions:
| Account | Debit | Credit |
|---|---|---|