Journal Entry:
Issuing Shares for Assets

by Sarah
(Miami, FL)

Q: How would you write this in a journal entry: a company issued 2,660 shares of its common stock after $31,360 in cash and computer equipment with a fair market value of $43,120 were received.

A: The journal entry would be:
DR Bank $31,360
DR Computer equipment $43,120
CR Ordinary Share Capital $74,480 ($31,360 + $43,120)

The entry above is a composite entry (meaning an entry where there is more than one debit or credit). The debits above indicate more assets, while the credit indicates an increase in capital (owner's equity).

Ordinary share capital is the term used to describe ordinary shares (common stock) in most countries around the world. A different term may be used in the U.S.