Rattich Company is authorized to issue 50,000 shares of common stock. The company sold 2,500 shares at

Question:

Rattich Company is authorized to issue 50,000 shares of common stock. The company sold 2,500 shares at $12 per share. Prepare entries in Journal form to record the sale of stock for cash under each of following independent alternatives:

(1) The stock has a par value of $5, and

(2) The stock has no par value but a stated value of $1 per share.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...