Entry #1 — Paul forms the corporation by purchasing 10,000 shares of $1 par stock. Entry #2 — Paul finds a nice retail storefront in the local mall and signs a lease for $500 a month. Entry #3 — PGS takes out a bank loan to renovate the new store location for $100,000 and agrees to pay $1,000 a month. Each share of common or preferred capital stock either has a par value or lacks one. The corporation's charter determines the par value printed on the stock certificates issued. Par value may be any amount—1 cent, 10 cents, 16 cents, $ 1, $5, or $100. Low par values of $10 or less are common in our economy. Results of Journal Entry Merchandise balance decreases by $5,000. Decrease in Assets Cost of Merchandise Sold account balance increases by $5,000. Increase in Expense.
Write the six questions of the Wise Choice Process and answer each one as it relates to your situation.The Wise Choice Process:
1. What's my present situation? (Describe the problem objectively and completely.)
I always make the same decisions over and over again. Every time I make the decisions, I hope for the best outcomes. When the outcomes are revealed, they always turn out to be the same. Bad. I never seem to learn my lesson the first time and always want to self indulge in immediate pleasure or reduce immediate discomfort. This makes me upset, frustrated, and negative.
Datebook 1 0 6 – Journal Entry Template
2. How would I like my situation to be? (What is your ideal future outcome?)
I want my situation to be successful. I want to make the right decisions. Put myself in situations to meet the right people. Stay positive and happy all the time. Find a great career that I enjoy. Raise a wonderful and beautiful family. Live a life of glory and stay strong. Graduate from college. Pursue all my Opportunities.
3. What are my possible choices? (Create a long list of specific choices that might create your preferred outcome.)
Go for a run.
Talk to people who care.
Attend every day of school and finish every assignment
Work hard
Stay focused.
Appreciate what I already have.
Let go of the past.
Stop judging myself.
Become involved with a charity program or some volunteer work.
Study on a regular basis.
Spend more time with my family.
Participate in more recreational activities.
Stay home and read a chapter instead of going out for a few drinks.
Become open to change.
Believe in myself.
Stay busy and actively participate in productive activities.
Stop worrying about what other people think.
4. What's the likely outcome of each possible choice? (If you can't predict the likely outcome of an option, stop and gather more information.)
Datebook 1 0 6 – Journal Entry Prompts
Go for a run: relieves all stress and leaves me with a clear mind, especially when I get into the routine of running on a regular basis.
Talk to people who care: more or less people who will take the time to listen. When you can vent to others about the things going through your head that are making it hard to focus, it is relieving.
Attend every day of school and finish every assignment: everyday of school is very important because you learn something new every day. When you begin to miss a lot of class, you miss a lot of learning. Also, finishing every assignment, required or not, is important as well because practice makes perfect. Apply myself.
Work hard: will keep my brain on point and perceptive to be able to accomplish all goals I set my mind to.
Stay focused: very similar to working hard. When you stay focused, anything you do seems more easy to accomplish.
Appreciate what I already have: creates happiness. When you long for more and more and more, you become the person who is never happy.
Let go of the past: will stop judging myself and will be able to take action towards change.
Stop judging myself: similar to letting go of the past, once I stop judging myself, letting go of the past becomes easier where I won't hold grudges anymore and I will move towards my success.
Become involved with a charity program or some volunteer work: will make myself feel better and more productive. Always great to do something that makes you feel like a better person so why not reach out a hand to those in need.
Study on a regular basis: Will improve my skills in classes and subjects as well as keep my grades up and at successful rates.
Spend more time with my family: similar to appreciating what you already have. You only have one family and it is always my mom, my dad, and me. Quality time with them always makes me feel better and helps keep me on the right path.
Participate in more recreational activities: will fill up my open slots in my agenda where I can't make any decisions of boredom that could jeopardize my future.
Stay home and read a chapter instead of going out for a couple drinks: in turn will prevent me from drinking and driving as well as keep my brain active and free of negativity.
Become open to change: change brings possibilities and I want to see possibilities and not the same thing, situation, or options.
Believe in myself: Key to change and success. Thomas the Chu-Chu Train- 'I think I can, I think I can.' But Kelsey Marie- 'I know I can. I know I can.'
Stay busy and actively participate in productive activities: Once again, the busier your stay, the less free time you have. The less free time you have, the less time you have to make the same negative decisions to kill your boredom.
Stop worrying about what other people think: it isn't about everyone else. It is about me. My future. My success. When I stop worrying about what other people think, that is going to open up some room to create more focus on me.
5. Which choices will I commit to doing? (Pick from your list in step 3.)
In order as if I was putting one foot in front of the other. One step at a time.
My #1's:
Go for a run
Stop judging myself
Become open to change
Believe in myself
Stop worrying about what other people think.
Let go of the past
Stay focused
My #2's:
Talk to people who care
Appreciate what I already have
Spend more time with my family
My #3's:
Attend everyday of school and finish every assignment
Datebook 1 0 6 – Journal Entry Example
Work hard
Stay focused
Study on a regular basis
Stay home and read a chapter instead of going out for a few drinks
My #4's:
Become involved with a charity program or volunteer work
Participate in more recreational activities
Stay busy and actively participate in productive activities
6. When and how will I evaluate my plan? (Identify specifically the date and criteria by which you will determine the success of your plan.)
My number ones and number twos are my main focus as of now. School doesn't start until August unless I can fit in one class this summer, which is exactly what I am currently working on. If capable of enrolling into a class for the summer, it will work out perfectly because that gives me sometime to adjust to working, going to school, and staying busy and focused. When I am still going strong come fall semester then I will know if my plan is working.
If I have to wait until fall semester before I can begin school, my focus will be on my number ones, twos, and fours. Then come end of my fall semester, when I am doing well, I will know that my plan is working.
To know my plan is working, I will be:
Focused and active.
On a very strict yet relaxing schedule.
Maintaining my grades
Completing every assignment and attending everyday of school
Volunteering at a children home or working for Give Kids the World
Most of all though, I will be happy and positive.
That, my dear ones, is how you really know I am on the right path and being successful. I have a light in my eye. It isn't shining yet. Oh no, it sure isn't buuuut... it will be! ;-)
Until next time.
Stock issuances
Each share of common or preferred capital stock either has a par value or lacks one. The corporation's charter determines the par value printed on the stock certificates issued. Par value may be any amount—1 cent, 10 cents, 16 cents, $ 1, $5, or $100. Low par values of $10 or less are common in our economy.
Par value gives no clue as to the stock's market value. Shares with a par value of $5 have traded (sold) in the market for more than $600, and many $100 par value preferred stocks have traded for considerably less than par. Par value is not even a reliable indicator of the price at which shares can be issued. New corporations can issue shares at prices well in excess of par value or for less than par value if state laws permit. Par value gives the accountant a constant amount at which to record capital stock issuances in the capital stock accounts. As stated earlier, the total par value of all issued shares is generally the legal capital of the corporation.
To record the issue of common (or preferred) stock, you will:
| Debit | Cash or other item received | (shares issued x price paid per share) or market value of item received |
| Credit | Common (or Preferred) Stock | (shares issued x PAR value) |
| Credit | Paid in capital in excess of par value, common (or preferred) stock | (difference between value received and par value of stock) |
Keep in mind your journal entry must always balance (total debits must equal total credits). What happens if we don't have a par value? Watch this video to demonstrate par and no-par value transactions. Notice how the accounting is the same for common and preferred stock. After the video, we will look at some more examples.
To illustrate the issuance of stock for cash, assume a company issues 10,000 shares of $20 par value common stock at $22 per share. The following entry records the issuance:
Cash (10,000 shares x $22 per share) | Debit 220,000 | Credit |
| Common Stock, $20 par (10,000 shares x $20 par per share) | 200,000 | |
| Paid-In Capital in Excess of Par Value—Common (220,000 cash – 200,000 par) | 20,000 | |
| To record the issuance of 10,000 shares of stock for cash. |
Notice that the credit to the Common Stock account is the par value times the number of shares issued. The accountant credits the excess over par value ($20,000) to Paid-In Capital in Excess of Par Value; it is part of the paid-in capital contributed by the stockholders. Thus, paid-in capital in excess of par (or stated) value represents capital contributed to a corporation in addition to that assigned to the shares issued and recorded in capital stock accounts. The paid-in capital section of the balance sheet appears as follows:
| Paid-in capital: | |
| Common stock—par value, $20; 10,000 shares | |
| authorized, issued and outstanding | $ 200,000 |
| Paid-in capital in excess of par value—common | 20,000 |
| Total paid-in capital | $ 220,000 |
When it issues no-par stock with a stated value, a company carries the shares in the capital stock account at the stated value. Any amounts received in excess of the stated value per share represent a part of the paid-in capital of the corporation and the company credits them to Paid-In Capital in Excess of Stated Value. The legal capital of a corporation issuing no-par shares with a stated value is usually equal to the total stated value of the shares issued.
To illustrate, assume that the DeWitt Corporation, which is authorized to issue 10,000 shares of common stock without par value, assigns a stated value of $20 per share to its stock. DeWitt issues the 10,000 shares for cash at $ 23 per share. The entry to record this transaction is:
Cash (10,000 shares x $23 per share) | Debit 230,000 | Credit |
| Common Stock, $20 stated value (10,000 shares x $20 stated value per share) | 200,000 | |
| Paid-In Capital in Excess of Stated Value—Common (230,000 cash – 200,000 stated) | 30,000 | |
| To record issuance of 10,000 shares of stock for cash. |
DeWitt carries the $ 30,000 received over and above the stated value of $200,000 permanently as paid-in capital because it is a part of the capital originally contributed by the stockholders. However, the legal capital of the DeWitt Corporation is $200,000.
A corporation that issues no-par stock without a stated value credits the entire amount received to the capital stock account. For instance, consider the DeWitt Corporation's issuance 10,000 shares of no-par stock for $250,000. If no stated value had been assigned, the entry would have been as follows:
Cash | Debit 250,000 | Credit |
| Common Stock, no par | 250,000 | |
| To record issuance of 10,000 shares for cash. |
Since the company may issue shares at different times and at differing amounts, its credits to the capital stock account are not uniform amounts per share. This contrasts with issuing par value shares or shares with a stated value. The actual capital contributed by stockholders is $250,000. In some states, the entire amount received for shares without par or stated value is the amount of legal capital. The legal capital in this example would then be equal to $ 250,000.
As you saw in the video, stock can be issued for cash or for other assets. When issuing capital stock for property or services, companies must determine the dollar amount of the exchange. Accountants generally record the transaction at the fair value of (1) the property or services received or (2) the stock issued, whichever is more clearly evident.
To illustrate, assume that the owners of a tract of land deeded it to a corporation in exchange for 1,000 shares of $12 par value common stock. The land had a market value of $14,000. The required entry is:
Land (use market value) | Debit 14,000 | Credit |
| Common Stock, $12 par (1,000 shares x $12 par) | 12,000 | |
| Paid-In Capital in Excess of Par Value—Common (14,000 market value – 12,000 par) | 2,000 | |
| To record the receipt of land for capital stock. |
As another example, assume a firm issues 100 shares of preferred stock with a par value of $40 per share in exchange for legal services received in organizing as a corporation. The attorney previously agreed to a price of $5,000 for these legal services but decided to accept stock in lieu of cash. In this example, the correct entry is:
Organization Costs (use agreed upon price) | Debit 5,000 | Credit |
| Preferred Stock, $40 par (100 shares x $40 par) | 4,000 | |
| Paid-In Capital in Excess of Par Value—Preferred (5,000 price – 4,000 par) | 1,000 | |
| To record the receipt of legal services for capital stock. |
