Journal Entry for Shares Issued
Q: Make a journal entry for the following (assume that this occurred in the second half of 2009):
a) issued additional shares for 1,200 in cash.
A: The journal entry would be as follows:
Debit Bank 1,200
Credit Shares issued 1,200
Because the shares are issued for cash we have more cash, and since cash is an asset which occurs on the left side, we debit this.
The shares issued is a type of capital account specifically for a company. A share is actually a small piece of ownership of a company (in a company you can have many owners and each owner owns shares in the company).
We have more shares issues - more capital - and since capital is owner's equity and occurs on the right side, we credit this account.
Hope that makes sense! Good luck!
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