4. Righty, Inc., entered into a stock subscription contract that called for the

Question

4. Righty, Inc., entered into a stock subscription contract that called for the purchase by investors of 15,000 shares of $12 par common stock at a price of $33 per share. The contract required a down payment of $15 per share, with the remaining $18 per share collectible at the end of three months. Required: a. Prepare the journal entry to record the stock subscription and down payment. b. The subscribers paid the remainder at the end of three months. Prepare the journal entry(ies) to record the final payment and the issuance of the shares of stock.

Explanation / Answer

Journal Entries Date Account Title and explanation Debit Credit Cash (15,000 Shares X $ 18) $                   2,70,000 1 Share Subscription Receivable (15000 Shares X $ 15) $                   2,25,000       To Common Shares Subscribed $                 1,80,000        To Addittional Paid in capital - Common stock $                 3,15,000 (To Record the stock subscription with down payment) Cash $                   2,25,000 2       To Share Subscription receivable $                 2,25,000 (To record for the balance recivable for subscription) Common Shares Subscribed $                   1,80,000 3           To Common Shares $                 1,80,000 (To Record the issue of the common shares )

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